JSW Cement recorded a 26% year-on-year volume increase in the second quarter of FY27, driven by its new Nagaur facility. While volume growth remains strong, higher fuel and logistics costs have impacted profit margins. The company implemented regional price hikes in October to manage these expenses. Investors will monitor whether these measures and the stabilization of the new plant can help improve profit margins.
JSW Cement released its results for the second quarter of fiscal year 2027, reporting a 26% year-on-year growth in total sales volumes. This performance was supported by a 40% increase in cement volumes and a 7% rise in GGBS volumes. A key driver for this growth was the company's new facility in Nagaur, which achieved a 70% capacity utilization rate during the period. Despite the rise in top-line growth, the company faced a 2.2% drop in blended net sales realization compared to the previous quarter, largely due to a shift in the sales mix toward the Eastern market.
Operational Costs and Margin Impact
Profit margins remained under pressure during the quarter due to several operational challenges. Rising costs related to diesel prices, extended lead distances for logistics, and fuel consumption have weighed on profitability. Additionally, the initial costs associated with ramping up the Nagaur plant acted as a drag on overall performance. The company reported an EBITDA per ton of 707 rupees. When accounting for the impact of the Nagaur facility, the underlying EBITDA per ton was 821 rupees, which highlights the cost of ongoing expansion projects. Management indicated that the Nagaur plant reached an EBITDA breakeven point during the quarter and is expected to see improved profitability in the coming months.
To address the pressure on margins, JSW Cement implemented price increases across multiple regions in October. Non-trade cement prices were raised by 15 to 20 rupees per bag in the South, 25 to 30 rupees in the East, 10 rupees in the West, and 20 rupees in the North. Trade prices in the East also saw an upward revision of 10 to 15 rupees per bag.
Looking ahead, the focus remains on the stabilization of the new capacity and the company’s ability to sustain volume growth while managing costs. Investors may track future updates on profit margins and how the price hikes impact demand in the coming quarters. Financial discipline, including the management of debt and the pace of recovery at the Nagaur unit, will also be key areas for monitoring as the company continues its expansion phase.