Market Price Rs 20 (FV 2 )
Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 391 crs
Date: 12th June 2017
Target : Rs 25
About the Company:
The company came into limelight after it was bought over by JSW Group. The group made an open offer at Rs 14 per share. They also bought shares of ACC group. JSW acquired 35.6% stake from the promoters and now the total stake is 50% of the equity. Rs 65 crore debt was also taken over by the JSW group.
JSW Cement has plans of listing in the year 2018-19 and they want to reach capacity of 30 metric ton.
The main product of the company is cement. The company has a plant of .2 million tonnes as of now. They have clinkerising capacity of 1.2 lac metric ton. What JSW wants to do is put up a plant of 1 million tonne clinkerising unit. The investment for the same would be in the region of 450 crores. 70% of the funds will come from debt and the rest 30% from equity of new shares. .
The company has huge limestone reserves that are at 60-80 million tonnes. JSW has a lot of plants coming up in the East and the initial plan was to import limestone. Now with the acquisition of Shiva Cement , after the expansion the units will be catering to the Salboni region where the plants of JSW cement will start commercial production from March 2018. This also indicates that the expansion of Shiva cement will have to be completed before March 2018 so that the produce could be supplied on time.
The company reported the sales of just 21 crores and the loss stood at 21 crores. These numbers will see a drastic change in the years to come as the expansion of 450 crores will propel the company to the next level. One can expect decent set of numbers from the year 2018-19 and JSW cement listing can also happen through this route and if that happens, it can be a multibagger in that sense.
Promoters hold about 50 % and, the public holding is about 50% .
At current price of Rs 20 per share the company is available at a low valuation. If bought at current valuation, it can easily cross Rs 25 per share in the next 1 year.
( Disclosure: The analyst has no holdings in the company as on date of issue being published)
Sebi Registration No: INH000001717