Scripscan:Kakatiya Cements ltd
cmp:79
Code:500234
Story:Kakatiya Cement is basically into three businesses. This company is into cement, sugar and power business.In the cement business this company has a capacity of about 3 lakh tonne per annum. The company has a sugar capacity of about 3,200 TCD and a 17 megawatt cogen power capacity.If you look at the financials of the company, FY11 sales were about Rs 100 crore with a small profit of about 4 crore, which is profit after tax. Now in the first nine month of the current financial year company's sales have grown by about 100% to about Rs 120 crore, there is a profit after tax of about Rs 13.4 crore as against a loss of Rs 6 crore, which the company did in the first nine months of the previous financial year. Nine months EPS is about Rs 17; full year EPS can be about Rs 25 so at the current price of Rs 88 the stock is trading at a PE multiple of just about 3.5.This company is almost debt-free.The company has got consistent dividend payment record, for the past 20 years the company has been paying dividend and it has never skipped dividend to the shareholders.If you look at the valuation of the company the market cap of the company at the current market price is about 63 crore.The company has got cash and cash equivalents of about Rs 23-24 crore. So you are getting this company at an enterprise value of about 40 crore. 40 crore enterprise value for a company which has done cash profits in the first nine months of about 19 crore, so you are getting this company at - basically two years of cash flow company which has rewarded its shareholders with dividends for the past 20 years.As there is revival in cement and sugar sector the profitability of the company can go up further and even at the current depressed scenario you are getting this at a PE multiple of just about 3.3.So PE multiple of 3.3 for a debt- free company where the enterprise value is just about two-years of cash flows, I think the stock with all these fundamentals looks undervalued at the current market price.
Source:A.C
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