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JKCEMENT - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListFundamental Rating: 3.4
📊 Financial Overview
- Revenue & Profitability: Quarterly PAT declined from ₹379 Cr to ₹336 Cr, indicating margin compression.
- Return Metrics: ROE at 14.6% and ROCE at 14.5% show moderate capital efficiency.
- Debt Profile: Debt-to-equity ratio of 0.97 is relatively high for a cement company, raising leverage concerns.
- Valuation: P/E of 50.0 and PEG of 11.7 suggest significant overvaluation compared to industry P/E of 38.9.
- Book Value: ₹785 vs. current price of ₹6,230 implies a high P/B ratio (~7.9), limiting intrinsic value appeal.
- Momentum: RSI at 39 and MACD at -78.6 indicate bearish sentiment and possible oversold conditions.
🏢 Business Model & Competitive Edge
- JK Cement operates in both white and grey cement segments, offering product diversification.
- Strong brand recognition and backward integration support operational efficiency.
- Presence in domestic and export markets enhances revenue stability.
💡 Entry Zone Recommendation
- Given RSI and MACD signals, accumulation is favorable near ₹5,800–₹6,000.
- Price near DMA 200 (₹5,877) offers a technical support level for long-term entry.
- Hold for long-term if price sustains above ₹6,000 with improving quarterly results.
✅ Positive
- Stable ROE and ROCE above 14% indicate efficient capital use.
- Strong institutional interest with FII holding up by 1.01%.
- Diversified product portfolio and established brand presence.
⚠️ Limitation
- High valuation multiples (P/E, P/B, PEG) reduce upside potential.
- Debt-to-equity ratio close to 1 signals financial risk.
- Declining quarterly profits and weak momentum indicators.
📉 Company Negative News
- Quarterly profit dropped by ₹43 Cr, reflecting cost pressures or demand slowdown.
- Domestic cement demand volatility may impact future earnings.
📈 Company Positive News
- FII holdings increased, showing foreign investor confidence.
- Strong EBITDA margins expected due to operational efficiencies.
🏭 Industry
- Industry P/E at 38.9 is lower than JK Cement’s, suggesting sector-wide caution on valuations.
- Government infrastructure push and housing demand support long-term cement sector growth.
🧾 Conclusion
- JK Cement is fundamentally solid but currently overpriced.
- Entry near ₹5,800–₹6,000 offers better risk-reward for long-term investors.
- Monitor debt levels and quarterly performance for sustained holding.
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