JK Lakshmi Cement hosted a conference call on May 27, 2024. In the conference call the company was represented by Mr Arun Kumar Shukla-President & Director and Mr Sudhir Bidakar-CFO.

Key takeaways of the call

The company had focused to reduce the gap between the company and competitors with respect to EBITDA per ton and is successful in achieving the same. EBITDA per ton is more than Rs 1000/ton in the last 2 quarters.

Q4 volumes was lower when compared to last year. This was primarily due to the company reducing volumes from outsourced units and due to focus on increasing the efficiency across the value chain. The company has stopped selling from the outsourced Punjab unit and also reduced volumes from Amethi outsourced unit.

Non Cement revenue in Q4FY2024 stood at Rs 154 crore of which Rs 86 crore was from RMC. The EBITDA margin for non cement stood at around 5% in Q4FY2024.

Trade sales contribution stood at 56% of the total sales and blended cement contribution stood at 66% in Q4FY2024.

Power and fuel:

Renewable energy constituted 47% in Q4FY2024 at group level and at 39% at JK Lakshmi and 46% at Udaipur Cement Works (UCWL).

On AFR also the company has progressed well in the last quarter. On a standalone basis at JK Lakshmi, TSR stood at 7% in FY2024 as against 4% in FY2023. The same stood at 11.27% in Q4FY2024.

In Q4FY2024 fuel Kcal cost was Rs 1.68 /kcal. The company does not expect fuel cost reduction in FY2025.

The company plans to add 7 MW solar capacity at Sirohi and also in other location. The company will commission AFR at Udaipur Cement Works by September FY2024. These two are the primary cost levers in FY2025.

TSR at AFR at consolidated level is expected to increase from 6% to 10% once the AFR is commissioned at UCWL.

Premium product contribution: The company’s premium product contribution in its key markets stood healthy at 25% of the trade sales.

Lead distance: The lead distance in Q4FY2024 stood at 372 kms down around 25 kms when compared to last year.

Utilization: The utilization at JK Lakshmi on a consolidated basis stood at 89% and 90% at Udaipur unit for FY2024 and the company expects the utilization to be around 70% in FY2025 and 80% on in FY2026 on the expanded capacity.

Current capacity utilization at Udaipur Cement Works stood at around 40%.

Clinkerization: The clinker to cement ratio has increased from 1.43x to 1.46x and the company plans to take it to around 1.5x.

Expansion:

The company commissioned its 2.5 million tonnes grinding unit in UCWL on March 28,2024.

Durg railway sliding is expected to conclude very soon.

Conveyor belt: The company has to acquire land for conveyor belt from Steel Authority of India and is in the process of negotiation. It expects the same to be completed in next 1 or to months to complete the negotiation and another 6 months to commission the same.

Surat Expansion: The company plans to double its Surat capacity from 1.5 MTPA to 2.7 MTPA which is expected to be commissioned in the last quarter of FY2025.

Durg: The company plans to add 2.3 MTPA clinker capacity and Cement grinding unit capacity by 4.6MTPA. It will be done in 2 phases. In the first phase, the company plans to commission  clinker capacity and one integrated grinding unit in Durg and 1 grinding unit in Prayagraj which  is expected to be commissioned by the end of FY2026 and the balance 2 grinding units , one each in Jharkhand and Bihar by the end of FY2027.

North East Expansion: The company has acquired Agrani Cement in North East for Rs 330 cr. Of which the company has made payment of Rs 125 crore in FY2024 and the balance Rs 200 crore is expected to be done in FY2025.

The company also plans to add capacity in Agrani cement as in the process of getting environmental clearance and acquiring the land. The company expects to complete the acquisition of land by April May of 2025. The company plans to commission the new capacity by FY2027 or by FY2028.

CAPEX:

The company plans to incur CAPEX of around Rs 225 crore in Surat.

The company plans to incur CAPEX of around Rs 2500 at Durg facility and plans  to incur around Rs 1800 crore in North East (Agrani Cement)

The company plans in cur CAPEX of around Rs 1200 crore in FY2025, Rs 1000 crore in FY2026 and around Rs 1200 crore in FY2027.

Debt: At standalone basis gross debt as on march 31 ,2024 stood at Rs700cr  and net debt stood at Rs 200 crore and on consolidate basis the company had gross debt as on March 31,2024 at Rs2000 and net debt at Rs 1350 cr.

Peak debt is expected to be around Rs 4000 crore in next 2-3 years. However the company plans to maintain Debt/Equity ratio at 2:1.

Dividend: Recommended a Final dividend of Rs 4.50, - per Equity Share of Rs 5 each (90%) for the Financial Year ended 31st March 2024, in addition to Interim Dividend of Rs 2 per Equity Share of Rs 5 each (40%) which has already been paid i. e. total dividend Rs 6.50, - per Equity Share (130%) for the said financial year.

Outlook:

With capacity utilization around 70% the company expects volume growth of around 10% YoY in FY2025.

Prices: Prices declined by around 5% QoQ in Q4FY2024 and in FY2024 prices declined by 1.5% when compared to FY2023. The company expects prices to decline by 1-1.5% in Q1FY2025. The company expects prices to improve once demand improves.

Management Commentary:

Commenting on the Results of the Company, Mrs. Vinita Singhania, Vice Chairman & Managing Director (VC&MD) of the Company said  "the Profitability of the Company improved on account of Higher Volume, Better Product & Sales Mix and Reduction in Fuel Cost "