Expansion plans, products portfolio to augur well for JK Cement

MUMBAI: A decent portfolio of products and expansion plans are to augur well for JK Cement. Additionally, positive attitude of the government to mobilise infrastructure projects makes the company attractive at the time when the valuation of the company is low.

JK Cement has gained nearly 25% in the last one month and is trading at Rs 249.7 as on October 4, 2012.

The company has a decent range of products and plans to add value added products in its portfolio. Presently the company produces various grades of ordinary Portland cement, Pozzolana Portland cement and white cement based putty for plastering walls and ceilings.

It recently has developed a new product called The Fixer, the commercial application for which has been tested and the market launch for the same will be done in the current fiscal.

The company is at an advantage as it is one of the biggest manufacturers in North India where the demand has been relatively high as compared to rest of India. The company has also received a clearance to establish a cement factory in Gulbarga district.

This would entail an investment of Rs 2326 crore and would be a growth driver for the company in the event of rising demand for cement form both the housing and the infrastructure segment. The company has also entered into a joint venture with the Government of Fujairah to set up a greenfield project.

The cement plant under this would be a dual process cement facility with a capacity of 0.6 million tonnes of white cement or 1 million tonnes of grey cement or a combination of both. The EPC contract for the same has already begun and is expected to complete by FY14.

The company has an Enterprise Value (EV)/ tonne of $ 52 and is lower than its peers; Heidelberg Cement and JK Lakshmi Cement which are trading at an average of $ 80 per tonne. Low valuations along with the growth story for the cement sector, makes the company worth looking into.