JK Cement reported healthy September Quarter 2023 numbers aided by strong volumes. The company reported 22% YoY volume growth of grey cement in Q2FY24. JK Cement is one of India’s leading manufacturers of grey and white cement in the country. The Company has an installed grey cement capacity of 20 MnTPA and white cement capacity of 1.20 MnTPA. In addition to cement, JK Cement also manufactures value-added products like wall putty, gypsum plaster, tile adhesives & grouts, wood finishes and paints. The company sells its white cement across 43 countries around the globe and has a strong international presence with two subsidiaries, JK Cement Works Fujairah FZC and JK White Cement (Africa) Ltd. Revenue from operations came in at Rs 2,753 crore in Q2FY24 compared to Rs 2,228 crore in the same period previous year, a rise of 24% YoY.
While the grey cement revenue and volume numbers were strong in September Quarter 2023, white cement revenue numbers were lower on account of lower pricing of putty. Speaking positively on white cement numbers, A K Saraogi, Deputy Managing Director and Chief Financial Officer said, “We had someone-off a big white cement order in the form of a big shipment to Australia. That was a 40,000 tons shipment to Australia.” JK Cement forayed into paint business in March 2022. The company reported revenues of Rs 70 crore in H1FY24 but with an EBITDA loss of Rs 7 crore in the same period. The management expects paint business to deliver better numbers in H2FY24. “Our internal target is between Rs 175-200 crore by the end of FY24”, said Saraogi.
Operating margins came in at 16.96% in Q2FY24 and expanded more than three percentage points YoY aided by better realizations, higher volumes, lower fuel and railway surcharge. Fuel cost declined 9% YoY and railway surcharge was down 3% YoY in Q2FY24. The company also received a 15% off-season railway discount in the July-September quarter which is a lean period (monsoons) for railways. Speaking on lower railway surcharge or freight, Saraogi said, “Our rail dispatches were 11% of the total dispatches, close to 4-4.5 million tons. So, we got about Rs 200 a ton impact, about Rs 7-8 crores.” Net profit came in at Rs 178 crore in September Quarter 2023, a rise of 58% YoY.
Capacity expansion to drive volume growth
JK Cement capital expenditure (capex) is Rs 1,400 crore in FY24, of which Rs 500 crore is already spent. Capex plan for FY25 is Rs 700 crore. JK Cement’s 1.5 million tons greenfield expansion in Ujjain is expected to be commissioned in Q3FY24. Panna greenfield expansion is also expected to be commissioned in September Quarter 2024. Speaking on Panna clinker debottlenecking, Saraogi said, “the Panna clinker line debottleneck has already been more or less completed. It is under trial. And we feel that from next quarter onwards, we should get regular production from the Panna debottleneck.” After Panna debottlenecking, JK Cement’s total grey cement clinker capacity will be at 15 million tons. Greenfield expansion at Prayagraj (grinding unit), two million tons is on stream and will be commissioned by Q2 FY25. The company plans to increase its clinker capacity to 24 million tons by FY25.
