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Showing posts with label JK Lakshmi Cement. Show all posts
Showing posts with label JK Lakshmi Cement. Show all posts

Saturday, January 19, 2008

JK Lakshmi Cement - Accumulate

JK Lakshmi Cement currently operates 3.5 million tonnes per year of cement capacity. The company is a leading player in north-west India with a wide network of 1500 dealers and 60 cement dumps. The company premium brand includes JK Lakshmiplast and JK Lakshmi Ready Concrete Mix (RMC).

JK Lakshmi Cement is planing to set up a greenfield cement plant operating around 2-2.5 MTPA capacity with a investment of around 650 Crores in the next three years. This is expected to widen it's presence in the eastern and southern states of India.

Expansion Details

1) The company is currently increasing it's cement capacity from 3.5 MPTA to 5 MTPA. This is expected to be operation by October 2008.
2) The company currently operates 5 RMC plant and expects to add 7 RMC units this fiscal.
3) The firm recently commissioned fully it's 36MW captive power plant. This is expected to improve it's Operating margin from the current quarter.

Investor with medium risk profile can consider investment into this stock with a horizon of 2 years. At the current market price of Rs. 168/- the stock valuations appears to be discounted compared to it's mid-cap peers. The stock currently trades at less than 4 times it's trailing 12 month EPS of 45. We initiate a buy call in this stock with a target of Rs. 320/- on it's current valuation. With the complete expansion in place which the company is undertaking, we expect the stock to be a potential multibagger.

The current quarter Q3' 07 results were below our expectation and also we saw a steep decline in Operating margins. We expect the margins to improve with the commission of Captive power plant. The bottomline of the company is also set to increase with the restructuring of it's 325 crore debt.

Risk

1) Cement imported from Asian counterparts like china and Thailand have become cheaper after goverment scrapping import duty.
2) Domestic cement prises are in it's peak, Possible reversal.
3) High Interest expense due to higher Debt ratio.

Posted by Srivatsan 1 comments

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Monday, December 31, 2007

Our Picks For the Year 2008

On the stocks which are already on our recommended list we feel Orchid Chemicals and Riddhi Siddhi Gluco Biols will emerge as clear winner in this new year.

On the large cap we like

ONGC (CMP Rs. 1236.50/-)

The stock currently trades at 12 times it's FY08E EPS of 105. At the current price the stock is an excellent value buy. Being an Oil Exploration company the high oil prices is set to benefit it's top line and bottom line growth. ONGC's aggressive gas discovery this year provides a positive outlook for re-rating in this counter.

On the Smallcap front our picks are

Shri Lakshmi Cotsyn Ltd (CMP Rs.197/-)

The stock currently trades at less than 6 times it's trailing 12 month EPS. With aggressive expansion plans and strong operating margins among textile stocks, the stock is a good value pick for the coming year.

Himalya International (CMP Rs. 27/-)

The stock currently trades at around 9 times it's trailing 12 month EPS. With growing domestic retail sector this food processing company is expected to see aggressive growth in both top line and bottom line earnings.

On the Midcap stocks we bet on

JK Lakshmi Cement (CMP Rs.198/-)

Coming soon...Watch out our blog for a detailed analysis on JK Lakshmi Cement

Posted by Srivatsan 7 comments

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Fundamental Analysis

Fundamental Analysis is the cornerstone of Investing. In fact, some would say that you aren't really investing if you aren't performing fundamental analysis.

During fundamental analysis we look at a stock from three aspects

Company

At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition.

Industry

At the industry level, there might be an examination of supply and demand forces for the products offered.

Economy

Fundamental analysis might focus on economic data to assess the present and future growth of the economy.

To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock's current fair value and forecast future value. If fair value is not equal to the current stock price, fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value. Fundamentalists do not heed the advice of the random walkers and believe that markets are weak-form efficient.