'Buy' JK Cement Shares Maintains Motilal Oswal — Here's Why

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Motilal Oswal Report

We estimate JK Cement Ltd. to generate a cumulative operating cash flow of Rs 81.0 billion during FY26-28, and its cumulative capex would be Rs 48.0 billion over the same period. Given the strong cash flow generation and low-cost expansions (capex cost stood at $60-70/tonne), we believe its net debt will peak out in FY26E at Rs 42 billion.

Further, its net debt-to-Ebitda ratio would decline to <1.0x in FY28E from 2.0x in FY25. We estimate its RoE/RoCE (post-tax) to improve to ~19%/13% in FY27 from ~13%/10% in FY25.

JK Cement saw re-rating in FY22, and started trading at average EV/Ebitda (one-year forward) of 17 times. Re-rating in the stock is attributable to its expanded operations, strong execution capabilities, and cost-reduction initiatives.

We believe JK Cement is best-placed among mid-size cement companies with a pan-India presence.

Our Ebitda estimates for FY26/FY27/FY28 are higher by ~4%/1%/5% than the consensus estimates for JKCE. It is currently trading at 19x/16x FY26/FY27E EV/Ebitda and EV/T of $185/$180.

We value JK Cement at 18x Jun’27E EV/Ebitda (premium to its long-term average) to arrive at a target price of Rs 7,250. We reiterate our Buy rating on the stock.

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