JSW Cement's variable cost/tonne is significantly lower than that of peers given the higher share of GGBS in its overall production (+40%). The company has achieved cost savings of Rs 200/tonne in H1 and expects another Rs 200/tonne of cost savings in H2, led by increasing green power/AFR share, logistics optimization and positive operating leverage.
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Motilal Oswal Report
JSW Cement Ltd. reported strong earnings in Q2 FY26, led by robust volume growth and improved operating performance. Weak cement realization remains a near-term challenge.
The company's variable cost/tonne is significantly lower than that of peers given the higher share of ground granulated blast furnace slag in its overall production (+40%). The company has achieved cost savings of Rs 200/tonne in H1 and expects another Rs 200/t of cost savings in H2, led by increasing green power/AFR share, logistics optimization and positive operating leverage.
Management reiterated its long-term capacity target of ~42 mtpa (~34 mtpa by CY28) vs ~22 mtpa currently.
We estimate a CAGR of ~18%/31% in revenue/Ebitda over FY25-28, driven by higher sales volume, pricing improvement and cost efficiency. Ebitda/tonne is estimated to be Rs 919/Rs 957/Rs 1,001 in FY26/FY27/FY28 vs Rs 699 in FY25.
We estimate debt to remain elevated due to higher capex of Rs 56 billion over FY25-28E. Net debt is estimated to be Rs 57.2 billion in FY28E vs Rs 32.3 billion as of Sep'25. Net debt-to-Ebitda ratio is estimated at similar levels of 3.0x by FY28E.
We value JSW Cement at 13x (earlier at 14x) Sep'27E EV/Ebitda to arrive at our revised target price of Rs 138 (earlier Rs 150). Maintain Neutral.
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