Saturday, July 21, 2007

JK Lakshmi Cements: Robust Jun'07 numbers...

JK Lakshmi Cements came out with its first quarter performance today. The company reported robust numbers. The company's profit performance is far better than many of its listed peers. A brief look at the numbers:

> Sales growth (volume) - 18%
> Production growth - 16%
> Sales growth (value) - 43%
> Operating profit - 47%
> Profit after tax - 77%
> EPS - 57%

> 12M trailing EPS - 36.7
> At a price of Rs.151, the stock trades at a P/E of a mere 4.1 times, one of the lowest among its other listed peers.

The company's results in the next few quarters are expected to be equally robust, given firm prices and higher volume growth (on the back of capacity expansions that were completed by the end of the Mar'07 qtr). The Sep'07 quarter is likely to be particularly good. This is because Sep'06 was a poor quarter for the company, owing to heavy rains which affected both production and despatches.


Thus, with a low base, the Sep'07 numbers are expected to look phenomenal. More important will be the expansion in the 12M trailing EPS, which now stands at Rs.36.7 per share. I expect that to go up to around Rs.42 to a share. At that kind of an EPS, the scrip will trade at an EPS of around 3.5 times. Ridiculous levels to be trading at, I think.

I have written about this company twice in the past. You can read it here and here.

4 comments:

sanjai said...

Hi,

That kind of PE wont be sustained for long time,
markets will have to come in line of it to give it
a fair valuation.For sure,and that is what value investing is all about,buy n hold and get
out with not less than 50%
the price for paitence shudnt be lesser.

Have a look at bhagyanagar industries,electrosteel castings they look impressive.Buy and hold candidates.what do u think.

Regards,
Sanjai.

Ravi Purohit said...

Yes, Sanjai. JK Lakshmi Cement is a value stock. It has had a nice move in the past one month, alongwith many other cement stocks. I expect it to move up further.

Will look at bhagyanagar inds and electrosteel castings. Thanks.

Anonymous said...

Hai,

JK group has two cement entries ??
JK Lakshmi & JK Cements.

Is there any inherent different in their business or that both of them compete with each other??

Ravi Purohit said...

Anonymous: The two belong to two different groups. And, their product offering is also different....i think JK Cements sells more of white cement than grey cement whereas I dont think JK Lakshmi sells any kind of white cement.