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Motilal Oswal Report
The brokerage firm Motilal Oswal Financial Services has reiterated a ‘Neutral' rating on JSW Cement Ltd., with a target price of Rs 137, implying a potential upside of 8%, citing a balanced outlook despite strong structural growth drivers and ongoing expansion initiatives.
JSW delivered a resilient performance in FY26, supported by strong volume growth (up ~11% YoY) and higher profitability (Ebitda/tonne up ~31% YoY to Rs 915), led by better grey cement realisations, cost efficiencies, and positive operating leverage.
The company's net debt declined to Rs 3,580 crore in FY26 vs Rs 4,070 crore in FY25, partly led by cash proceeds from IPO.
The brokerage estimates a CAGR of ~19%/21%/14% in revenue/Ebitda/adjusted PAT over FY26- 28, driven by higher sales volume (~18% CAGR). Ebitda/tonne is estimated to reach Rs 872/Rs 948 in FY27/FY28 vs Rs 915 in FY26.
The company's GGBS profitability remains higher, given the cost advantage and stable realisation.
Cumulative operating cash flow is expected to increase to Rs 2,880 crore over FY27-28 vs Rs 1,910 crore over FY25-26. The company's capex is pegged at Rs 2,200 crore in FY27/FY28 (each).
The brokerage estimates cumulative net cash outflow of Rs 1,540 crore over FY27-28 (given the aggressive expansions) vs s 1,210 crore over FY25-26. Net debt is estimated to increase to Rs 6,060 crore by FY28 vs Rs 3,580 crore in FY26.
Net debt-to-Ebitda ratio is estimated to increase to 3.4x by FY28E vs 2.9x in FY26.
Motilal Oswal maintains its Ebitda estimates for FY27/FY28. However, raise EPS estimates by ~12-15% for FY27/FY28 due to lower depreciation/ finance cost estimates.
The brokerage values JSW Cement at 13x FY28E EV/Ebitda to arrive at our revised target price of Rs 137. Reiterate Neutral.
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