JKCEMENT — earnings call

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Prepared remarks

Moderator · Conference Operator

MR. VAIBHAV AGARWAL - PHILLIPCAPITAL (INDIA) PRIVATE LIMITED JK Lakshmi Cement Limited October 29, 2024

ending September ‘24. · The major highlights of the working; the net sale for the quarter was 2,322 crores as against

The major highlights of the working; the net sale for the quarter was 2,322 crores as against 2,555 in the previous quarter, a dip of about 9% and 2,476 year-on-year, a dip of about 6%.

The operating expenses were lower by 2% at 2,119 as against 2,164 previous quarter and year-on- year flattest 2,124.

The EBITDA for the quarter was 273 crores as against 479 in the previous quarter, a dip of 43% and 447 in the previous year, dip of 39%.

EBITDA margins was 11.7% for the quarter as against 18.7% in the previous quarter and 18% in the previous year.

If you look at profit before tax, it was Rs.

64 crores as against 292 crores and 246 crores and profit after tax was 45 crores as against 203 crores and 179 crores.

EPS for the quarter was Rs.

5.80 paisa as against 26.2 and 23.1.

For the half year April-September, the net sales were down by 3% at 4,877 crores as against 5,117.

The operating expenses was lower by 1% at 4,283 crores JK Lakshmi Cement Limited October 29, 2024 as against 4,345 crores.

The EBITDA was down by 11% at 752 crores as against 849 crores.

Margins was 15.4% as against 16.9%.

Profit before tax was 355 crores as against 454 crores, a dip of 22% and profit after tax was 247 crores as against 305 crores, a dip of 19%.

The EPS was Rs.

32.10 paisa as against Rs.

39.50 paisa.

As you would have seen, the working for the quarter was not on the expected lines.

That was mainly on account of both external and internal factors.

External factors were the demand because of the monsoons and the expected demand was not there and there was pressure on pricing continued and for internal there was additional shutdown because of monsoons and which resulted incremental expenses affecting the bottom line.

As regards the project, the 6 million tons expansion work is at a good speed and we are confident that we would be able to commission as per the expected lines either by end of third quarter or beginning of fourth quarter FY26. If you look at the balance sheet; the gross debt as on 30th September was 4,664 crores as against 4,592 crores as on March.

The cash balance as on 30th September was 1,620 crores as against 2,011.

Net debt was 2,582 crores as against 3,044 crores.

The net debt to EBITDA was 1.6x as against 1.29x and the net debt to equity was 0.56x as against 0.48x.

So, these are the major highlights I'll be happy to answer your questions.

Thank you.

Shravan Shah: · And now how we look at the prices in the October month versus our 2Q average?

If I look at from the grey cement perspective, so 1H we have done close to 2.1% volume growth and we were looking at 10% for this year.

So, now for full year how much we are looking at?

And in terms of the realization for grey cement was actually QOQ, if I am just looking at the numbers, it is 0.8% whereas for white it was 3% down.

So, for both the things just wanted to understand because for other companies we have seen (+2%) kind of a QOQ decline in realization.

So, is there anything even if you can specify the incentive that how much we have booked in this quarter so that will help and also how the prices are there in the October month now?

And now how we look at the prices in the October month versus our 2Q average?

Moderator · Conference Operator

We will take the next question from the line of Amit Murarka from Axis Bank.

Amit Murarka: · So, while the one-off expenses are one well explained in the quarter like some other opening

So, while the one-off expenses are one well explained in the quarter like some other opening revenue was also there, I believe which was on the higher side also.

Generally, could you talk about like in south you had an extended maintenance shutdown.

So, how has it improved your cost efficiency or what was that extended shutdown taken for?

Also, the south extended shutdown like could you just maybe talk a bit more about it as to what was it for and how that improved your efficiency or any cost metric?

Also, lastly the kcal cost has gone up on a QOQ basis, why would that be?

So, it's mainly because of AFR cost going up because pet coke cost has gone down in the quarter.

Moderator · Conference Operator

The next question is from Patanjali Srinivasan from Sundaram Mutual fund.

Patanjali Srinivasan

I wanted to understand how much our unit cost of production can go down by in the next couple of quarters because I think from last quarter's base to this quarter, the number has gone up like quite a bit.

I think it's up almost Rs.

450 per ton.

Moderator · Conference Operator

The next question is from Ritesh Shah from Investec Capital.

Ritesh Shah

First is any update on Toshali, specifically I'm looking at the limestone, long term supply agreement that we were looking with the government, that’s a first question.

So, second question is on the paints business?

Moderator · Conference Operator

The next question is from the line of Navin Sahadeo from ICICI Securities.

Navin Sahadeo

Before I ask a question just a clarification on the previous question.

EBITDA loss you said for the first half was 25 crores, so how much would that be in Q2?

Moderator · Conference Operator

We will take the next question from the line of Abhishek Poddar from HDFC Mutual fund.

quarter, that is reflected. · Amit Murarka:

Just one regarding the white cement.

We have seen realizations falling in last few quarters.

How is the market there?

Can you talk about the competitive landscape there, how the margins are doing and where do you see the bottoming out?

Just one question or more, how do we think volumes here like it is 1.7 last year?

Should we think about growth this year and if you can give some guidance that how the industry is growing in this?

And just one last question on the grey cement side.

Are you already seeing some green shoots in demand?

If you can talk about how the season is October is and how do you expect post?

Moderator · Conference Operator

The next question is from Raghav Malik from Jefferies.

Raghav Malik

I just wanted to check on the CAPEXs target for the year.

Are you still retaining the same target of 1,800-2,000 crores for FY25 given that we've done 500 odd crores in the first half?

Moderator · Conference Operator

The next question is from Prateek Kumar from Jefferies.

Prateek Kumar

My first question is on your profitability.

So, you said that realizations have benefited from maneuvering of markets during this quarter.

So, next quarter it should normalize like versus industry peers your realization trend versus other peers?

Moderator · Conference Operator

The next Question is from the line of Rajesh Ravi from HDFC Securities.

Rajesh Ravi

First question pertains to your CAPEXs.

You already spent 1,400 crores on consol basis.

And you are saying that 2,000 crores is the annual target for FY25. So, are we looking at the second half to be so dull on the CAPEXs?

Moderator · Conference Operator

The next question is from the line of Shravan Shah from Dolat Capital.

Shravan Shah: · And now how we look at the prices in the October month versus our 2Q average?

Just a couple data points.

So, blended mix for this quarter and road-rail mix was how much?

And blended mix?

And sir for this quarter how much was the incentive that we have booked?

And for all the 6 million tons expansion, so previously we said that December ‘25, next December we will be starting so that timeline remains intact or any update there?

And also, is it possible to share the fuel mix for this quarter how much was the pet coke, imported coal?

And is it fair to say that this quarter, let's say at a consol level if we look at 11.1% kind of EBITDA margin.

So, the white cement or let's say whatever way we can look at grey margin would be much lower and white is still higher than this blended average.

Directionally just trying to understand because as you mentioned that the putty, significant competition is there.

So, just trying to see whether that margin has also come off decently there also

Moderator · Conference Operator

Ladies and gentlemen, that was the last question for today.

I would now like to hand the conference over to Mr. Vaibhav Agarwal for closing comments.

Over to you sir.

Vaibhav Agarwal

Thank you.

On behalf of PhillipCapital (India) Private Limited, we thank the participants for joining the call and thank you very much sir for giving us the opportunity to host the call.

Thank you, Michelle.

You may now complete the call.

We wish you all a very Happy Diwali and a very Happy Dhanteras, thank you.

Moderator · Conference Operator

Thank you very much sir.

Thank you.

Ladies and gentlemen, on behalf of PhillipCapital (India) private limited that concludes this conference.

We thank you for joining us and you may now disconnect your lines.

Questions and answers

Moderator · Conference Operator

Thank you very much sir.

We will now begin the question-and-answer session.

The first question is from the line of Shravan Shah from Dolat Capital.

Shravan Shah: · And now how we look at the prices in the October month versus our 2Q average?

First on the other expenses for this quarter was how much one time which we will not be seeing from third quarter onwards because that has impacted profitability a lot?