JK Cement Q3FY26 EBITDA Grows 13% YoY; Motilal Oswal Sets ₹6,685 Target

JK Cement has reported strong financial performance for Q3FY26, with EBITDA rising 13% year-on-year to ₹5.60 billion, meeting analyst expectations. The cement manufacturer's quarterly results demonstrate resilient operational performance despite some margin pressures in the competitive cement industry.

Financial Performance Highlights

The company's Q3FY26 financial metrics present a mixed but overall positive picture:

Metric	Q3FY26 Performance	Year-on-Year Change	vs. Estimates
EBITDA	₹5.60 billion	+13%	In line
Operating Margin	~16%	-70 bps	-90 bps
EBITDA per tonne	₹935.00	-7%	-6%
Adjusted PAT	₹2.10 billion	~+10%	+14%

The company's adjusted profit after tax of ₹2.10 billion exceeded estimates by 14%, demonstrating strong bottom-line performance. However, depreciation increased approximately 17% quarter-on-quarter, contributing to higher costs. The effective tax rate stood at around 35%, higher than the estimated 28%.

Operational Performance and Market Dynamics

Management emphasized that demand remained robust throughout Q3FY26, with particularly strong December volumes and high plant utilization rates. Central India continues to be a key growth driver for the company's operations. The demand environment shows positive momentum, with management projecting growth of 6-7% year-on-year in Q4FY26 despite operating on a high base.

Looking ahead to Q1FY27, the company expects demand growth to accelerate to 7-8% year-on-year. This outlook reflects the underlying strength in the cement sector and JK Cement's market positioning.

Pricing Strategy and Channel Management

A significant development in the quarter was the improvement in non-trade prices by ₹15-20 per bag. This pricing adjustment has helped reduce the gap between trade and non-trade prices, which should contribute to reduced discounting pressures in trade channels. This strategic pricing move is expected to support margin recovery in subsequent quarters.

Growth Projections and Valuation

Motilal Oswal projects strong growth trajectory for JK Cement over the forecast period FY25-28E:

Parameter	Projected CAGR (FY25-28E)
Revenue	14%
EBITDA	18%
Profits	24%

The brokerage expects EBITDA per tonne to improve progressively, reaching ₹1,059.00 in FY26E, ₹1,107.00 in FY27E, and ₹1,140.00 in FY28E, compared to ₹1,012.00 in FY25. Return on equity is projected to strengthen to approximately 17% in FY28E from 13.50% in FY25.

Investment Recommendation

Motilal Oswal has reiterated its BUY recommendation for JK Cement with a revised target price of ₹6,685. The valuation is based on 17x FY28E EV/EBITDA multiple. Currently, the stock trades at 17x and 15x FY27E and FY28E EV/EBITDA respectively, indicating reasonable valuation metrics given the company's growth prospects and operational improvements.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-4.29%	-2.50%	+4.04%	-13.23%	+25.21%	+163.90%

Choice Institutional Equities has reaffirmed its positive stance on JK Cement , maintaining a BUY rating with a target price of ₹7,200 per share. The brokerage's recommendation is supported by a comprehensive investment thesis centered on sector fundamentals and company-specific growth drivers.

Investment Thesis and Key Growth Drivers

The brokerage has outlined five key pillars supporting its investment recommendation:

Investment Pillar	Details
Sector Tailwinds	Better demand and healthy pricing heading into Q4 and FY27
Capacity Expansion	On track to reach 36+ Mnt by FY27 end from 28.7 Mnt as of December 2025
Cost Efficiency	Increasing green power adoption, targeting 75% by FY30
Financial Discipline	Net debt to EBITDA maintained well below 2x
ROCE Expansion	Expected improvement of 495 basis points over FY25-28E

Capacity Expansion and Operational Efficiency

JK Cement's capacity expansion plan remains on track, with the company positioned to achieve over 36 million tonnes by the end of FY27, representing significant growth from the current capacity of 28.7 million tonnes as of December 2025. The company's commitment to cost-efficiency is demonstrated through its strategic focus on green power adoption, with an ambitious target of achieving 75% green power utilization by FY30.

Financial Performance Projections

Choice Institutional Equities expects substantial improvement in return metrics, projecting ROCE expansion of approximately 495 basis points over the FY25-28E period. The analysis indicates ROCE growth from 11.2% in FY25 to 16.1% in FY28E under reasonable operational assumptions.

Valuation Framework and Target Price

The brokerage employs a robust Enterprise Value to Capital Employed (EV/CE) based valuation framework for its price target determination:

Valuation Metrics	FY27E	FY28E
EV/CE Multiple	3.7x	3.7x
Target ROCE	-	16.1%
Current ROCE (FY25)	11.2%	-

At the target price of ₹7,200, the implied valuation multiples for FY28E are:

Multiple Type	FY28E Implied Value
EV/EBITDA	17.3x
Price-to-Book	5.5x
Price-to-Earnings	31.2x

Choice Institutional Equities considers the assigned EV/CE multiple of 3.7x conservative, given the expected expansion in return on capital employed. The firm conducted sanity checks using implied EV/EBITDA, P/BV, and P/E multiples to validate the target price methodology.

Sector Outlook and Company Positioning

The positive outlook is supported by anticipated cement sector tailwinds, including improved demand dynamics and healthy pricing environment expected to continue into Q4 and FY27. JK Cement's disciplined approach to leverage management, maintaining net debt to EBITDA ratios well below 2x, positions the company favorably for sustained growth while managing financial risk effectively.