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My View On J K Lakshmi Cement

About the Company


One of the renowned company in the cement sector and been fancied stock in the capital market.


About the Results


The company declared its third quarter performance for the period ended 31st Dec 2008, the company did surprise all with a very good QoQ increase in performance, though on a YoY there has been a slip in the bottomline.

QoQ profit margins have improved and this has been vastly possible due to the lower operating expenses and lower interest outgo. Net sales rose by just 1.35% but a 7.68% fall in operating expenses helped it post a 39% rise in EBITDA at Rs.78.58 crore. Interest outgo, which was at Rs.10.82 in Q2FY09, has come down to 4.73 crore in Q3FY09. Net profit at Rs.56.04% was up by a whopping 108% on QoQ. OPM improved from 19.30% to 26.39% and NPM from 9.15% to 18.82%.

But the story does a U-turn when compared on a YoY basis. Net sales was up 5.45%, operating expenses rose 12% and this pulled down the EBIDTA, which was down 10% and consequently, PAT was also down 8.28%. Production on a YoY rose from 8.89 lakh tonnes to 9.98 lakh tonnes and sales was up marginally from 9.09 lakh tonnes to 9.98 lakh tonnes.

QoQ, this is a good performance but YoY, clearly the pressure of the slowdown in realty activities and the fall in the price of cement, especially in Northern India where KJ has its cement unit and also where it sells, has been reflected. The lower fuel costs have come to the rescue which helped it post a better QoQ, which otherwise might not have been possible.

The company’s ongoing expansion plans are well on schedule. Infact the project is expected to be completed by Jan 09’ end and then the capacity will go up from the present 3.65 mtpa to 4.75 mtpa. It is also setting a greenfield cement plant with a 2.7 mtpa capacity in Chattisgarh and for that it is yet to acquire the land.

About The Stock


Unless the slowdown is over and specially in reality sector , any hope for major positive news from cement sector could not be made. Stock is a good buy but the present scenario doesn't suggest an immediate buy.


Disclaimer : I do not have any personal holding in this stock.