J K Lakshmi Cement (CMP Rs 78):-
The name J.K. Organisation, which today is one of the leading Private Sector Groups in India, was founded over 100 years ago. For J.K. Organisation it's been a century of multi-business, multi-product and multi-location business operation. The companies in the Group have a diverse portfolio, including Automotive Tyres & Tubes, Paper & Pulp, Cement, V-Belts, Oil Seals, Power Transmission Systems, Hybrid Seeds, Woollen Textiles, Readymade Apparels, Sugar, Food & Dairy Products, Cosmetics, etc. JK Organisation has more companies to its name like JK Paper, JK Tyre, JK Seeds, JK Sugar, CliniRx Research, JK Insurance Brokers and many more. Other member companies include Raymond Ltd, JK Cement, JK Files & Tools etc (http://www.jkorg.in/index.php)
About JK Lakshmi Cement: - (http://www.jklakshmicement.com/)
Book Value Rs 103.74 EPS Rs 36.56 P/E Ratio 2.06 Debt/Equity Ratio 1.09
Promoted by the HS Singhania Group, J K Lakshmi Cement has an installed capacity of 4.75mn MT with plants located in Sirohi (Rajasthan). Its key markets comprise Rajasthan and Gujarat. The company has recently expanded its cement capacity to 4.8mn MT from 3.7mn tonnes in FY08. It also has captive power plants of 36MW and 9 ready mix concrete plants with a capacity of 0.56mn cubic metres.
FY09 Performance: - During the fiscal year 2008-09, the company’s gross turnover increased by 9% to Rs. 1404 crore against the turnover of Rs. 1286 crore in the previous financial year. The production during the year has gone up by 11% thereby achieving a capacity utilization of 104%. The net profit at Rs. 178.59 crore was lower against Rs. 223.67 crore posted in the previous financial year due to high input costs during the first three quarters FY 2008-09.
Q4FY09 was very good for JK Lakshmi as it reported a net profit of Rs. 104.08 crores which is 54% increase over the Rs. 67.63 crores net profit posted during Q4FY08. The sales and production during the quarter has registered an impressive growth of 18%.
“When compared on a sequential basis, during the fourth quarter we have been able to effectively reverse the slide in profitability witnessed in the first three quarters. Increased volume, all-round improvement in the efficiencies and reduction in the input costs have helped us to improve the profitability. We have also been able to complete our expansion projects in time and in this quarter by addition of 11 lac MT our capacity has grown by 30%” said Ms Vinita Singhania, Managing Director, JK Lakshmi Cement.
FIIs raising stake: - As at 31 March, 2009 Promoters hold 45.7% stake (45.6% in Dec-08) and FIIs hold 7.4% stake (5.9% in Dec-08).
Valuation: - The stock looks quite cheap at current valuations as it trades at a P/E multiple of just around 2, with dividend yield of more than 5% and Book Value of Rs 103.74. (The company announced Rs 4 divided per share for FY2008-09)
The company has taken up the work of Waste Heat Recovery system which would generate 12 MW power and which would bring further savings in the power cost after its commissioning in the year 2011. The project entails an investment of Rs. 125 crore. Commenting on the progress of the greenfield site at Durg in Chattisgarh, she said “Satisfactory progress has been made in the area of land acquisition and we expect our Greenfield plant at Durg to be completed by 2011-12.”
JK Lakshmi has formed a rounding bottom over the last 8 months and now after impressive results, it has given a breakout with highest volumes in many months. Buy the stock around CMP of Rs 78 for short-term target of Rs 95. Risk-averse investors can keep stops below Rs 69; long-term investors can accumulate the stock and hold for handsome returns.