JSW Cement has kept its “buy” rating from two major brokerages despite weaker margins in the first quarter of the fiscal year, though one firm trimmed its price target slightly.
Brokerages hold firm on JSW Cement despite Q1 margin dip
Jefferies maintained its price target of Rs 150 per share for JSW Cement, while Citi lowered its target to Rs 160 from Rs 165. Both firms kept their “buy” recommendations, citing expectations of sequential improvement in earnings before interest, taxes, depreciation, and amortization (EBITDA) per tonne.
The company reported a consolidated net profit of Rs 161 crore for the quarter, a sharp turnaround from a Rs 1,356 crore loss in the same period last year. Revenue rose 21.6% year-on-year to Rs 1,896 crore, but EBITDA fell 7.5% to Rs 299 crore, squeezing margins to 15.7% from 20.7%.
Jefferies attributed the margin pressure to steep losses at the new Nagaur plant and a weaker mix of Ground Granulated Blast-furnace Slag (GGBS). Citi pointed to high marketing costs, which dragged EBITDA per tonne down to Rs 785 from Rs 915 in the previous quarter and Rs 975 a year earlier.
Management remains confident the Nagaur plant will reach EBITDA breakeven by September 2026 as utilization ramps up, according to Jefferies. The company’s overall volumes grew 15% year-on-year, driven by a 26% increase in cement sales. Citi expects market share gains and cost improvements to support earnings, keeping JSW Cement’s volume growth targets for FY27 intact.
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Standalone revenue rose to Rs 1,737.89 crore from Rs 1,445.22 crore in the same quarter last year. However, power and fuel costs climbed to Rs 257.33 crore, while freight and handling expenses reached Rs 395.57 crore. Finance costs stood at Rs 80.14 crore.
Investors may be weighing the near-term margin squeeze against the company’s growth trajectory. JSW Cement’s ability to scale the Nagaur plant efficiently could determine whether the current optimism holds, especially as input costs remain volatile. The broader cement sector has seen mixed performance this year, with demand uneven across regions.
Share price struggles despite turnaround
JSW Cement’s shares have gained 9.4% year-to-date but remain down 11% over the past 12 months. The stock’s performance reflects investor caution amid fluctuating profitability and higher operational costs.
The company’s pivot from heavy losses to profitability in a single quarter suggests operational improvements, but the margin compression raises questions about sustainability. If the Nagaur plant’s ramp-up stalls or input costs continue rising, the current brokerage optimism could face a reality check.
