Down 25% from 52-week high, JK Cement is now a 'value buy': Choice Equity

Choice Broking upgrades JK Lakshmi Cement to 'Buy' with a ₹7,200 target, citing strong expansion, earnings growth, and 25% upside potential

JK Cement share price today: JK Lakshmi Cement’s recent share price decline has opened up a potential buying opportunity, according to Choice Equity Broking. The brokerage upgraded its rating on the cement major to ‘Buy’ from ‘Add’, while maintaining the target price at ₹7,200, implying a potential upside of nearly 25 per cent from the current market price of ₹5,702.

 

The firm noted that although JK Lakshmi Cement’s stock has corrected by 24.5 per cent from its 52-week highs, its strong business fundamentals remain intact. The analysts cited robust sector tailwinds, capacity expansion, and a disciplined financial approach as key reasons for optimism.

 

 

Strong expansion pipeline

JK Lakshmi Cement is on track to significantly enhance its production capacity, with a clear roadmap to reach 32 million tonnes by FY26-end. The company commissioned a one-million-tonne grinding unit at Prayagraj in October 2025, while the integrated plant in Hamirpur is expected to be operational by December 2025. A three-million-tonne greenfield unit at Buxar, Bihar, is scheduled for completion by early 2026, while a four-million-tonne clinker unit and a three-million-tonne grinding unit at Jaisalmer are planned for FY28.

 

Additionally, a new wall putty plant with a capacity of six lakh tonnes at Nathdwara, Rajasthan, is expected to commence operations by FY27. The company has set a capital expenditure target of ₹2,800–3,000 crore for FY26.  ALSO READ | NHPC shares drop 3% even as Q2 profit rises 15%; What's weighing the stock?

Healthy financial outlook

For the quarter ended September 2025 (Q2FY26), JK Lakshmi Cement reported a consolidated revenue of ₹3,019 crore, up 17.9 per cent year-on-year (Y-o-Y), led by higher volumes and stable pricing. Sales volumes grew 14.6 per cent to 5 million tonnes, while average realisations improved 2.9 per cent to ₹6,026 per tonne. The company’s Ebitda surged 57 per cent Y-o-Y to ₹447 crore, despite a sequential dip caused by temporary cost spikes from maintenance and marketing activities.

 

Choice Broking expects the company’s Ebitda to grow at a compounded annual rate of 20 per cent between FY25 and FY28, supported by 8–10 per cent volume growth and improving realisations. Net profit is projected to rise from ₹1,155 crore in FY26 to ₹1,867 crore by FY28, while return on capital employed (RoCE) is seen expanding from 11.2 per cent to 16.1 per cent over the same period.

 

The brokerage values JK Lakshmi Cement using an Enterprise Value to Capital Employed (EV/CE) approach, assigning a multiple of 3.7x for FY27–FY28. At the target price of ₹7,200, the implied valuation corresponds to an EV/Ebitda of 18.3x and a price-to-earnings ratio of 34.8x for FY27.

Cost optimisation and margin levers

The management remains confident of achieving cost savings of ₹75–90 per tonne by FY26, driven by efficiency initiatives and higher green power adoption. The recent spike in costs, due to kiln maintenance and dealer conferences, is expected to normalise in subsequent quarters. The company also anticipates a ₹100 per tonne reduction in costs as production volumes rise.

 

Furthermore, the company is implementing a disciplined leverage strategy, maintaining net debt-to-Ebitda well below 2x. Its planned cost rationalisation, coupled with stable cement demand and capacity additions, positions JK Lakshmi Cement for steady earnings growth.

JK Cement stock outlook

The correction in JK Lakshmi Cement’s stock, as per analysts at the brokerage, offers an attractive entry point. Sector tailwinds, execution discipline, and expansion-led growth, they said, will support rerating. With robust earnings visibility, improving margins, and strong capital efficiency, the brokerage expects the company to deliver superior shareholder returns over the next three years.