Buy JSW Cement; target of Rs 133: Prabhudas Lilladher

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Nagaur ramp-up drives volume growth: Total volumes grew 26% YoY, with cement volumes up 40% and GGBS volumes up 7%, supported by the ramp-up of Nagaur, which achieved 70% capacity utilisation in Q2FY27.
  • Cost savings and efficiency improvements: Higher clinker utilisation, OLBC, WHRS, AFR, and logistics efficiencies are expected to drive cost savings of INR550-600/t as operations scale up.
  • GGBS volume growth and pricing: Management is targeting high-single-digit volume growth in FY27, with opportunities to increase the GGBS share in concrete mix from 35-40% to 50%.
  • Capacity additions and expansion plans: The company plans to add 2mtpa of GGBS grinding capacity at Vijayanagar and 2mtpa GU at Dolvi, providing long-term growth visibility.

Thesis Validation Checklist

  • Nagaur capacity utilisation and EBITDA/t: Monitor Nagaur's capacity utilisation and EBITDA/t, which is targeted at INR650-700 in Q4FY27.
  • GGBS volume growth and pricing: Track GGBS volume growth and pricing trends, as well as the company's ability to increase the GGBS share in concrete mix.
  • Cost savings and efficiency improvements: Monitor the company's progress in achieving cost savings and efficiency improvements, including the impact of higher clinker utilisation, OLBC, WHRS, AFR, and logistics efficiencies.
  • Capacity additions and expansion plans: Track the company's progress in adding new capacities and expanding existing ones, including the commissioning of new grinding units and the ramp-up of Nagaur.