ICICI Securities has reiterated its BUY recommendation on JK Cement and revised its 12-month target price to Rs 6,450, implying an upside potential of nearly 20% from the current market price of Rs 5,370. Despite facing short-term margin pressure from rising fuel and packaging costs, the brokerage remains constructive on the company’s long-term growth trajectory. JK Cement delivered healthy volume expansion in FY26 and continues to execute one of the most aggressive capacity expansion programs in the Indian cement sector. Strong demand visibility, new plant commissioning, growing renewable energy adoption, and cost-efficiency initiatives are expected to support earnings growth over the next several years.

ICICI Securities Maintains BUY Call on JK Cement with Rs 6,450 Target

Investment View: ICICI Securities continues to view JK Cement as one of the strongest long-term growth stories in the domestic cement industry. While near-term profitability may face headwinds from inflationary pressures, the company’s expanding capacity base and superior volume growth outlook are expected to drive meaningful earnings expansion over the medium term.

The brokerage has maintained its BUY rating while revising estimates to account for higher input costs. The target price of Rs 6,450 is based on a valuation multiple of 17.5x FY28 estimated EV/EBITDA.

Q4FY26 Performance Reflects Strong Demand but Margin Compression

JK Cement reported revenue of Rs 3,887.5 crore during the fourth quarter of FY26, representing growth of 8.6% year-on-year and 12.3% sequentially. The growth was primarily driven by a robust increase in cement dispatches.

Key quarterly highlights include:

• Revenue growth: 8.6% YoY to Rs 3,887.5 crore
• Volume growth: 12.4% YoY
• EBITDA: Rs 682.5 crore, down 10.8% YoY
• PAT: Rs 333 crore, down 7.6% YoY
• EBITDA per tonne: Rs 1,002, down 20.6% YoY

The decline in profitability was mainly attributed to lower cement realizations across both grey and white cement segments. Although sales volumes remained strong, pricing weakness reduced operating leverage during the quarter.

Capacity Expansion Strategy Strengthens Long-Term Growth Visibility

Capacity creation remains the cornerstone of JK Cement’s growth strategy.

The company added approximately 8 million tonnes per annum (mtpa) of capacity during FY26 and now operates total cement capacity of roughly 35.3 mtpa. Management is targeting approximately 40 mtpa capacity by FY28 and an ambitious 50 mtpa capacity by FY30.

Major expansion projects currently underway include:

• 4 mtpa integrated clinker facility at Jaisalmer
• 3 mtpa grinding unit at Jaisalmer
• 2 mtpa expansion at Bikaner
• 2 mtpa expansion in Punjab

These projects are expected to become operational during H1FY28, significantly enhancing JK Cement’s production footprint and market penetration.

Volume Growth Expected to Outpace Industry Trends

Management expects the Indian cement industry to grow between 6% and 8% during FY27. JK Cement, however, believes it can significantly outperform industry averages.

The company has guided for:

• Additional 2.5 mtpa grey cement volume in FY27
• 8%–10% growth in white cement volumes
• Approximately 16% blended volume growth during FY27

ICICI Securities forecasts consolidated volume CAGR of nearly 10% between FY26 and FY28, driven by recently commissioned plants and improving utilization levels across regions.

Cost Inflation Creates Temporary Earnings Pressure

Rising fuel and logistics expenses remain the principal near-term challenge.

Management indicated that fuel and packaging inflation could increase operating costs by approximately Rs 150-200 per tonne in FY27 if geopolitical tensions continue to impact energy markets.

Additional concerns include:

• Diesel price increases potentially adding Rs 50-60 per tonne to logistics expenses
• Higher employee costs due to annual wage revisions
• Increased branding and selling expenditures

Recognizing these pressures, ICICI Securities reduced its EBITDA forecasts by approximately 16% for FY27 and 15% for FY28.

Green Energy Transition Could Become a Major Margin Driver

One of the most encouraging aspects of JK Cement’s strategy is its commitment to renewable energy adoption.

The company currently derives approximately 51%-52% of its energy requirements from renewable sources and plans to increase this share to:

• 55% by FY27
• 75% by FY28

Management expects these initiatives to generate substantial cost savings while improving sustainability metrics.

The company is also increasing:

• Alternative fuel usage
• Captive coal consumption
• Logistics optimization initiatives
• Operating leverage benefits from new facilities

As a result, ICICI Securities expects EBITDA per tonne to improve from Rs 1,013 in FY26 to approximately Rs 1,145 by FY28.

Paint Business Progressing Toward Profitability

JK Cement's paints segment continues to scale steadily.

During Q4FY26:

• Paint business revenue stood at Rs 380 crore
• EBITDA loss narrowed to approximately Rs 40 crore

Management expects FY27 paint revenues between Rs 500 crore and Rs 550 crore and believes the segment can achieve EBITDA breakeven or marginal profitability during the year.

This could create an additional growth avenue beyond the company’s core cement operations.

Financial Outlook Remains Robust Through FY28

ICICI Securities expects JK Cement to maintain strong financial momentum over the next two years.

The brokerage projects:

• Revenue CAGR of 11.4% between FY26-FY28
• EBITDA CAGR of 17.1%
• PAT CAGR of 18.9%

These estimates highlight the earnings potential embedded in the company’s ongoing expansion cycle.

Key Investment Levels for Investors

Current Market Price: Rs 5,370

ICICI Securities Target Price: Rs 6,450

Potential Upside: Approximately 20%

FY28E EPS Estimate: Rs 181.5

FY28E EV/EBITDA: 14.9x

Investment Horizon: 12 Months

For long-term investors, JK Cement appears well-positioned to benefit from sustained infrastructure demand, housing sector growth, expanding capacity, and operational efficiencies. While FY27 may witness temporary pressure from fuel inflation, the company's aggressive expansion strategy and cost optimization roadmap provide strong visibility for earnings acceleration beyond the near term.