JK Cement Flags Rising Cost Pressures from Mid-Q1, Demand Remains Resilient
Input Costs Set to Impact Margins in Coming Months
JK Cement’s Head of Business, Anuj Khandelwal, has indicated that rising input costs, particularly fuel and packaging, are expected to start impacting the company’s margins from mid-Q1 onwards. While the current quarter remains largely insulated due to existing inventory, the cost pressures are likely to emerge between mid-May and mid-June, depending on stock levels across plants.He noted that the present scenario still reflects relatively lower-cost raw materials, but the benefit is temporary. As inventories deplete, higher fuel and packaging costs will begin to reflect in operational performance.
Fuel and Packaging Costs Likely to Rise Sharply
Khandelwal highlighted that fuel costs alone could increase by ₹125 to ₹200 per tonne, depending on regional and product mix variations. On average, the industry is expected to see a rise of about ₹150 per tonne in fuel expenses.Additionally, polypropylene-based bag costs are witnessing a sharp uptick, contributing nearly ₹100 per tonne to overall expenses. This increase is attributed to supply constraints, as polypropylene production has been deprioritized amid a focus on LNG output, leading to shortages in the market.
Overall, the combined impact of fuel and packaging is estimated to be in the range of ₹225 to ₹250 per tonne.
Regional Fuel Mix Varies Across Operations
The company’s fuel sourcing mix differs significantly across regions. In southern India, around 75% of the requirement is met through pet coke, while in the central region, approximately 90% is sourced from domestic coal. In northern markets, 65 to 70% comes from pet coke, with 10 to 15% from Indian coal.This regional variation influences cost structures and exposure to global and domestic price movements.
Demand Trends Stay Strong Despite March Softness
On the demand front, JK Cement continues to see healthy trends. Khandelwal stated that industry demand grew by 8 to 10% during January and February, supported by strong activity across regions.Although March witnessed a slight moderation due to the timing of Holi, the company expects the month to close with around 5% growth. For the full fourth quarter, industry demand is projected to grow between 7 to 8% year-on-year.
He emphasized that the temporary softening in March is not a concern, and overall demand conditions remain robust.
Capacity Utilization Remains High
JK Cement is currently operating at full capacity, reflecting sustained demand momentum. The company has not scaled back production and continues to monitor developments closely while maintaining strong output levels.Pricing Trends Remain Stable
Pricing trends have remained largely stable during the quarter. Non-trade segment prices have increased by ₹10 to ₹15 across regions, while trade segment prices have seen minimal movement, ranging between no change to a ₹5 increase.Future pricing adjustments are expected to depend on the ability of companies to pass on rising costs and regional demand conditions.
Market Performance
JK Cement currently has a market capitalization of approximately ₹39,274.63 crore. The company’s shares have gained nearly 17% over the past year, reflecting steady investor confidence amid stable demand conditions and operational performance.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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