JK Cement cut volume growth guidance, but a timely expansion makes up for it
Subscribe to enjoy similar stories. JK Cement Ltd has lowered its FY25 volume growth guidance for grey cement from 10% to 6-7%. It expects industry volume to grow 3-4%.
The cut comes after a muted September quarter (Q2FY25) in which demand was hurt by an intense monsoon and prolonged kiln shutdown in south India. Growth in central region volumes was more than offset by lower volumes from the south. Grey cement volumes fell 3.4% year-on-year to 3.8 million tonnes (mt) and capacity utilisation stood at 64% in Q2FY25.
Total sales volume, including grey and white cement, fell around 5% to 4.3 mt. Grey cement demand is expected to improve from mid-November onwards, management said. Also read: Prestige Estates gears up for big launches in H2, but timely approvals are key Secondly, elevated costs hurt margin in Q2FY25, which led to a cut in FY25 and FY26 Ebitda estimates by some brokerages.
But a comforting factor is that JK Cement’s brownfield expansion in central India, which will add 6 million tonnes per annum (mtpa) of capacity, is on schedule. It is expected to start operating by the Q3 or Q4 of FY26. This will increase its total grey cement capacity from 24.34 mtpa at present to 30 mtpa by FY26, thus providing volume growth visibility.
Remember, JK Cement aims for 50 mtpa of capacity by FY30. Further, capital expenditure (capex) guidance for FY25 and FY26 was maintained at ₹1,900 crore and ₹1,800 crore, respectively, including maintenance costs. The focus on improving cost efficiencies continues and the cost reduction target of ₹150-200 per tonne over two years was retained.
Savings of ₹65-70 per tonne are likely in FY25 due to these measures. That said, some potential dampeners cannot be ignored. A meaningful recovery in
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