Buy JSW Cement; target of Rs 140: Motilal Oswal

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Robust volume growth: JSW Cement's sales volume rose ~26% YoY to 3.9mt in 2QFY27, driven by a 40% YoY increase in cement volumes and a 7% YoY rise in GGBS volumes.
  • North plant ramp-up: The North plant achieved EBITDA break-even in 2QFY27 and is expected to deliver EBITDA/t of ~INR650-700 in 4QFY27, driven by improving utilization and profitability.
  • Pricing discipline: The company maintained its pricing position broadly in line with 1QFY27 and expects prices to remain firm, supported by industry-wide cost pressures and healthy demand.
  • Capacity expansion: JSW Cement's capacity expansion plans are on track, with the 2.5mtpa Nagaur grinding unit expected to be commissioned in 4QFY28 and the Fujairah project targeted for commissioning in 1QFY28.

Thesis Validation Checklist

  • Volume growth: Monitor JSW Cement's ability to sustain volume growth momentum, driven by its regional presence and market mix.
  • North plant utilization: Track the improvement in North plant utilization, which is expected to drive profitability and EBITDA/t.
  • Pricing trends: Watch for any changes in cement pricing trends, which could impact JSW Cement's realizations and profitability.
  • Capacity expansion: Monitor the progress of JSW Cement's capacity expansion plans, which are expected to drive long-term growth.