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:

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:

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

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.

JK Cement has announced the commissioning of major production facilities in Central India, significantly expanding its manufacturing footprint in the region. The cement manufacturer has successfully brought online substantial production units that will enhance its capacity to serve growing market demand.

New Production Facilities

The company has commissioned key manufacturing units in Central India as part of its expansion strategy:

These new facilities represent a significant addition to JK Cement's production capabilities, with the clinkerization unit providing the foundation for cement manufacturing while the grinding units will process the clinker into finished cement products.

Upcoming Buxar Facility

In addition to the commissioned units, JK Cement has announced plans for a new grinding unit in Buxar. This upcoming facility will further strengthen the company's manufacturing network and enhance its ability to serve customers across different regions.

The strategic location of these facilities in Central India and the planned Buxar unit will enable JK Cement to optimize its distribution network and reduce transportation costs while improving supply chain efficiency.

Manufacturing Expansion Strategy

The commissioning of these production units demonstrates JK Cement's commitment to expanding its manufacturing capabilities across key markets. The combination of clinkerization and grinding facilities provides the company with integrated production capabilities in the Central India region.

These developments position JK Cement to better serve the construction and infrastructure sectors with increased production capacity and improved geographical coverage through its expanded facility network.