JK LAKSHMI CEMENT
 
  

 

SHARETIPSINFO >>Research Reports >>JK LAKSHMI CEMENT (26-12-2009)

 

LISTING
CMP
Rs 68
52 WEEK HIGH/LOW
Rs 160/ Rs 34
FACE VALUE

Rs 5

PE RATIO
2.9
AVERAGE VOLUME
50000
MARKETCAP
Rs 832 crore
P/BV

1.05

DIV YIELD
3%

COMPANY OVERVIEW:
J K Lakshmi Cement was established in the year 1982.  It has state of art plant in Sirohi, Rajasthan. With capacity expansion and further commissioning of a split location grinding unit at Motibhovan, Kalol (Gujarat), the combined capacity today stands at 4.75 mn MT per annum.
It has wide network of 70 cements dumps and over 2200 dealers spread across the northern India and western India.
Company also boosts to be the integral part of the major projects like Sardar Sarovar Dam, Golden Quadrilateral, and IGNP.


Important client List of Company:
L&T
Nagarjuna Construction
NTPC
IVRCL
TATA  Projects
Rosa Power Supply
Unity Infra
Everest Industries
Valecha Engineering
Punj Lloyd

PRODUCT MIX:


Product

Sales value(In crore)

% of Total

Cement

Rs 1404 crore

100%

INDUSTRY OUTLOOK:
Indian cement industry has total installed capacity of 219 million tons. It is the second largest cement producer in the world.
Industry is expected to do well at least for next 5 years. Higher government spending on infrastructure will keep the demand buoyant. Cement demand is expected to grow at 10% annually. While the global cement industry is growing at 5%. The per capita consumption of cement in India is low at 156 kg while globally it is at 396 kg.
Demand for cement is also expected to be good from the housing sector. There is short supply of houses which needs to be filled.
Government social projects under NAREGA scheme will also see good demand for cement. Overall cement sector will outperform market in coming quarters.

INVESTMENT RATIONAL:
Good demand is expected from the Infrastructure and Housing projects.
Higher government expenditure on infrastructure makes it recession proof.
Recent hikes in cement prices will help the company to better its margin.
Company use of Pet coke instead of coal helps in saving fuel cost.
It is part of major government project.
It has good corporate client base.
Company has 15000 member in mason`s club. They are provided free accident insurance cover. This also helps in pushing the product to retail clients.

SHAREHOLDING PATTERN:

 

 

NO. OF SHARE

% OF TOTAL

PROMOTERS

27203469

 

44.47%

INSTITUTION

13808843

 

22.57%

GENERAL PUBLIC

20167150

 

32.96%

GRAND TOTAL

61179462

 

100.00%

FINANCIAL:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

TOTAL INCOME

707.93

974.27

1293.07

1410.19

EXPENDITURE

-579.12

-715.18

-955.53

-1093.49

PBDITA

 

128.81

259.09

337.54

316.7

DEPRECIATION

-53.07

-44.33

-58.54

-69.11

PBIT

 

75.74

214.76

279

247.59

INTEREST

 

-19.49

-36.14

-27.85

-20.91

PBT

 

56.25

178.62

251.15

226.68

TAX

 

-0.8

-0.71

-26.93

-48.09

PAT

 

55.45

177.91

224.22

178.59

Key Highlights:
CAGR IN TOTAL INCOME IS 25.5%.
CAGR IN PBDITA IS 34.56%.
CAGR IN PAT IS 47.10%.

RATIOS:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

EPS

 

9.063499

29.08002

36.64955

29.19117

PBDITA MARGIN

18.1953

26.59324

26.10377

22.45797

NPM

 

7.832695

18.26085

17.34013

12.66425

INTEREST COVER

3.886095

5.942446

10.01795

11.84075

Key Highlights:
EPS has grown at CAGR of 47.10% over the period of 4 years.
PBDITA margin increased from 18% in FY06 to 22.5% in FY09. Margin declined by around 4% in FY09 as compared to FY08, the decline was due to higher fuel cost and raw material.
NPM margin increased from 7.8% in FY06 to 12.66% in FY09. Margin declined by around 4% in FY09 as compared to FY08, the decline was due to higher fuel cost and raw material.
Interest Cover increased from 3.8 in FY06 to 11.8 in FY09.

COMPARISION OF Q2FY2010 WITH Q2FY2009:

 

 

Q2FY09

% CHANGE

Q2FY10

TOTAL INCOME

343.35

1.27857871

347.74

EXPENDITURE

-286.66

 

-231.11

PBDITA

 

56.69

105.7329335

116.63

DEPRECIATION

-18.73

 

-20.5

PBIT

 

37.96

 

96.13

INTEREST

 

-10.82

 

-5.36

PBT

 

27.14

 

90.77

TAX

 

-0.26

 

-43.6

PAT

 

26.88

75.48363095

47.17

Key Highlights:
Total Income increased 1.25% in Q2FY10 on YoY.
PBDITA increased 105.7% in Q2FY10 on YoY.
PAT increased 75.5% in Q2FY10 on YoY.

VALUATION &OUTLOOK:
At cmp of Rs 68 it is trading at just 2.9 xs to trailing twelve months EPS. This makes the stock undervalued at current level. On the other hand industry average of is 10X. If we value the counter at considerable discount at 5X, the fair value comes at Rs 145.
It is dividend paying company, at current price dividend yield comes at around 3%. Book value per share is Rs 64.
Fundamentally company is value pick at this price.

CONCLUSION:
Investors with time horizon of 8-12 months could take position on the counter. The downside on the counter seems to be limited at this level.

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