Choice upgrades JK Cement stock to Buy, sees 25% upside; here's why
Choice has maintained its target price at Rs 7,200, implying an upside potential of 25.1 per cent from the market price of Rs 5,702.
- Nov 7, 2025,
- Updated Nov 7, 2025 9:37 AM IST
Domestic brokerage firm Choice Institutional Equities has upgraded JK Cement Ltd (JKCE) to ‘Buy’ from ‘Add’, citing an attractive entry point after a steep stock correction. The brokerage noted that the cement major’s shares have fallen nearly 32 per cent from recent highs, even as its business fundamentals remain intact.
Choice has maintained its target price at Rs 7,200, implying an upside potential of 25.1 per cent from the market price of Rs 5,702.
The brokerage’s bullish stance rests on five key pillars: robust sector tailwinds amid healthy pricing and steady demand; an on-track capacity expansion toward 32 MTPA by FY26-end; disciplined leverage management with net debt-to-EBITDA below 2x; continued focus on cost efficiency through green power adoption; and a projected 500-bps improvement in RoCE over FY25–28E.
The upgrade comes on the heels of JK Cement’s Q2FY26 results, which Choice described as a mix of strong volume and realisation offset by cost spike. Consolidated revenue rose 17.9 per cent YoY to Rs 3,019 crore, while volumes surged 14.6 per cent YoY to 5 million tonnes, surpassing estimates.
However, a sequential rise in costs weighed on profitability. Total cost per tonne increased 8.1 per cent QoQ due to major maintenance work on three kilns and cement mills, along with annual branding expenses. Consequently, EBITDA per tonne dropped Rs 335 sequentially to Rs 891, and EBITDA margin contracted 572 bps QoQ to 14.8 per cent.
Despite the temporary cost pressure, the management retained its 10 per cent volume growth guidance for FY26, expecting about Rs 100 per tonne cost savings in the coming quarters as maintenance and branding spends normalise.
Expansion plans remain on track, with the 1 MTPA Prayagraj grinding unit commissioned in October 2025 and the Buxar unit slated for completion by Q4FY26. The company has guided for a capex of Rs 2,800–3,000 crore in FY26.
Choice expects JKCE’s EBITDA to grow at a 20.1 per cent CAGR over FY25–28E, valuing the stock at an EV/CE-based target of Rs 7,200. At this level, the stock would trade at an implied FY27E EV/EBITDA of 18.3x and P/E of 34.8x, the brokerage added.
Domestic brokerage firm Choice Institutional Equities has upgraded JK Cement Ltd (JKCE) to ‘Buy’ from ‘Add’, citing an attractive entry point after a steep stock correction. The brokerage noted that the cement major’s shares have fallen nearly 32 per cent from recent highs, even as its business fundamentals remain intact.
Choice has maintained its target price at Rs 7,200, implying an upside potential of 25.1 per cent from the market price of Rs 5,702.
The brokerage’s bullish stance rests on five key pillars: robust sector tailwinds amid healthy pricing and steady demand; an on-track capacity expansion toward 32 MTPA by FY26-end; disciplined leverage management with net debt-to-EBITDA below 2x; continued focus on cost efficiency through green power adoption; and a projected 500-bps improvement in RoCE over FY25–28E.
The upgrade comes on the heels of JK Cement’s Q2FY26 results, which Choice described as a mix of strong volume and realisation offset by cost spike. Consolidated revenue rose 17.9 per cent YoY to Rs 3,019 crore, while volumes surged 14.6 per cent YoY to 5 million tonnes, surpassing estimates.
However, a sequential rise in costs weighed on profitability. Total cost per tonne increased 8.1 per cent QoQ due to major maintenance work on three kilns and cement mills, along with annual branding expenses. Consequently, EBITDA per tonne dropped Rs 335 sequentially to Rs 891, and EBITDA margin contracted 572 bps QoQ to 14.8 per cent.
Despite the temporary cost pressure, the management retained its 10 per cent volume growth guidance for FY26, expecting about Rs 100 per tonne cost savings in the coming quarters as maintenance and branding spends normalise.
Expansion plans remain on track, with the 1 MTPA Prayagraj grinding unit commissioned in October 2025 and the Buxar unit slated for completion by Q4FY26. The company has guided for a capex of Rs 2,800–3,000 crore in FY26.
Choice expects JKCE’s EBITDA to grow at a 20.1 per cent CAGR over FY25–28E, valuing the stock at an EV/CE-based target of Rs 7,200. At this level, the stock would trade at an implied FY27E EV/EBITDA of 18.3x and P/E of 34.8x, the brokerage added.