JK LAKSHMY CEMENT

JK LAKSHMI CEMENT : BSE CODE 500380

JK Lakshmi Cement belongs to the Singhania (JK) Group wherein the promoter group holds about 41 percent shares. About 26 percent shares are held by financial institutions like LIC, IL&FS, FIIs etc. and remaining shares are held with the public.

The company has a share capital of 57 crores made up of 5.7 Crore equity shares of Rs.10.00 each and as at the end of March 2007, the company had a reserves of 330 crores, commanding a good book value.

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The company ended up FY 2006-07 with a net profit of Rs.178 crores commanding an eps of about 31. For first three quarters of FY 2007-08 the company has shown net profit and eps as under :

Net Profit Eps (quarterly)
JUNE 07 68.46 11.99
SEPT. 07 73.50 12.87
DEC. 07 61.10 10.70

Even if the company maintains the same profitability in March 2008 (around 60), the company may end up the year with a total net profit of about 263 crores, commanding an eps of about 46 which is considered very good. Considering the present price, the share is available at a very very reasonable pe of about 3 and is an excellent buy. Sooner or later, the share will get a re-rating and will see a PE of at least 7-8 thereby double the present price.

I am reproducing a message given by the company which is very relevant and positive.

JK Lakshmi Cement Ltd has informed BSE that the Company has come out of the Corporate Debt Restructuring (CDR) purview. The Company has achieved excellent performance consistently for more than two years.In this regard the Company has issued the following Press Release:The Company has replaced high cost debts by cheaper funds to the extant of Rs 325 crores, which will reduce interest costs. It has come out of the Corporate Debt Restructuring (CDR) purview.The Company's 36 MW Captive Power Plant which was commissioned recently, will contribute significantly to reduce power costs. Company's project for further enhancing the capacity from 3.4 million MT to 5 million MT per annum is progressing as per schedule and is expected to be commissioned by end of 1st half of year 2008-09. The Company is aggressively expanding its manufacturing facility of Ready Mix Concrete (RMC), a value added product."

The share, in our opinion, is an excellent buy at the current prices with minimum downside risk. One can buy in small lots and if there is a dip of over 15-20 percent, more shares can be acquired.

Please Note : This share has been recommended by various other analysts also but our studies are quite independent.

a) We advise only regarding fundamentally strong and performing companies. The companies may be mostly profit making and in a few cases, they may be turn around companies.
b) Please go through our fundamental analysis carefully, verify the facts and figures (if you need to) and only then invest.
c) We expect investors to have a time horizon of at least one year and more.
d) We do not advise for short term investing, which is risky.
e) Despite all these, we do not take any responsibility for your financial matters. Investment is solely your decision.

(AJAY SINGH RATHORE)

KASHIWALA