JK Cement well placed given cost control, capacity expansion plan
JK Cement have reinforced analysts’ optimism about the company’s ability to perform better than its peers. The company’s first quarter numbers were in line with analysts’ estimates. In a quarter where demand was affected due to slow down in construction activities, heat wave and labour shortage, the company’s net sales grew by 1% year-on-year to Rs2,719 crore. Net profit grew by 67% to Rs185 crore.
A focus on expansion and tighter cost control are the two major factors that set JK Cement apart from mid-tier peers. Capacity expansion has helped the company gain market share in various geographies. At present, over 60% of its cement capacity caters to the northern region followed by 19% and 16% to the central and the southern regions respectively. The remaining 5% capacity is sold in the western region. In its post earnings’ conference call, the company announced a plan to increase capacity two-folds by FY30 from the present capacity of 24MT.
On the cost front, the company’s total costs in manufacturing a tonne of cement fell by 7% to Rs4,581 in the June quarter year-on-year. The cost reduction was due to increasing share of green power, alternative fuel and lower logistics costs. It plans to increase the share of green power to 75% by FY30 from 57% in the June 2024 quarter. In the next two years, the company estimates the cost of manufacturing a tonne of cement to reduce by Rs150-200.
For FY25, the company estimates 10% year-on-year growth in sales volume compared with 5.3% growth in the June 2024 quarter. This
