Choice Institutional Equities maintained a positive outlook on JK Cement, citing market share gains and a goal to reach 50 million tonnes of annual capacity by FY30. Investors may watch how the company balances this expansion against rising fuel and operating costs.
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Choice Institutional Equities has maintained its positive stance on JK Cement, keeping a target price of ₹7,000 per share. The brokerage highlights the company’s strategic focus on scaling up operations and improving profitability through better resource management. A central part of this strategy is the company's objective to grow its grey cement capacity to approximately 50 million tonnes per annum by the 2030 financial year.
The company is currently seeing growth in its market share, particularly in Central India. This performance is supported by recent efforts to increase production capacity. Management has indicated an ambition for double-digit volume growth through the 2027 financial year, which serves as a core factor in the positive outlook.
While expansion is a key driver, the company faces some cost challenges. Analysts have factored in an estimated rise in costs of about ₹150 per tonne for the second quarter of the 2027 financial year. This includes a ₹100 per tonne increase in fuel expenses and an additional ₹50 per tonne in other operating costs. The company is attempting to offset some of these expenses through savings in packaging, but total costs per tonne are still expected to rise by roughly ₹130 by FY27.
To manage these costs, JK Cement is shifting toward more sustainable practices. This includes increasing the use of green power and alternative fuels and raw materials. These efforts are aimed at supporting structural margin improvements. Despite the pressure on costs, the brokerage projects a resilient EBITDA per tonne of approximately ₹1,053 for the company.
Investors will likely track the company's ability to execute its expansion plans without overextending its balance sheet. The key monitorables moving forward will be the actual pace of capacity commissioning, the trend in fuel prices which impacts operating margins, and whether the company can sustain its volume growth targets in a competitive cement market. The valuation remains linked to the company's long-term enterprise value relative to its cash earnings as it progresses toward its 50-million-tonne target.