I picked up about 700 shares of Andhra Cement. I am sharing some quick facts here -
a) Sales have gone off the roof. From 100 crs last yr (in 18 mnths) to 270 crs this year (on 12 months) is brilliant. Also the Q-on-Q sales have been on the rise.
b) Profits : dont look at PAT because last yr's 40 crs is laced with an extra-ordinary income of 65 crs. The op profit was -25 crs for last year. This year, Andhra Cement closed at 38 crs of net profit.
c) The 1 yr fwd P/E is around 6, which makes it one of the cheapest cement stocks in the market.
Cement stocks are a function of the infrastructure growth in the country and although, I despise fundamentals and industry analysis .. i can see it's effect on the company financials here.
Net net, Andhra Cement is extremely convincing. Currently at about 40 rupees.
Thursday, December 13, 2007
Andhra Cement
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3 comments:
shankar
dont get me wrong, but i am not able to see any value in the company
the company still has a negative networth, in a highly cyclical industry where price and profit swings are big.
In addition these are great days for cement companies ...even the tier 2 or tier 10 companies are making money due to the high operating leverage of this business. andhra cement some does not seem to have scale, has done badly in the past and is just turning around.
my opinion is based on cursory view of the financial. if you have analysed it in detailed and know that the business is being turned around for good, then it could be undervalued
regards
rohit
Hi Rohit, appreciate your take on the stock. I guess, the turnaround story takes note when sales increase by a factor of almost 4x in a 1 yr period. (and these are not some teeny-weeny sales ... a jump from 100 crs (in 18 mnths) to 270 crs (in 12 months) is quite huge. Also notice the Q-on-Q jump.
On the financial front .. the company moves from -25 crs to 38 crs (which is obviously quite a 'positive' sign). I am banking on the increase in sales that ths cement stock is working up .. to be the driver of mkt price growth.
Btw, one correction - the est fwd PE is only 6 but around 8.9
Andhra Cement was up 16% on Friday. I bought the stock on Thursday :-) (big smile)
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