JK Lakshmi Cement Downgraded to 'Sell' by MarketsMOJO After Negative Results in June Quarter

JK Lakshmi Cement, a midcap company in the cement industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 22, 2024. This decision was based on the company's negative results in the June quarter, after two consecutive positive quarters. The company's PAT(Q) has fallen by 39.6% at Rs 70.30 crore, while its interest (HY) has grown by 27.96% at Rs 93.04 crore. Additionally, the operating profit to interest (Q) ratio is at its lowest at 4.59 times.
Technically, the stock is in a mildly bearish range and has deteriorated from mildly bullish on August 22, 2024, generating a -1.47% return since then. The MACD and Bollinger Band technical factors also indicate a bearish trend.

In the last year, JK Lakshmi Cement has underperformed the market, generating a return of 16.61% compared to the market's (BSE 500) return of 37.99%. However, the company has a high management efficiency with a ROCE of 18.65% and a strong ability to service debt with a low debt to EBITDA ratio of 1.41 times. Its operating profit has also shown a healthy long-term growth rate of 25.95%.

Moreover, with a ROCE of 17.4, the stock is currently trading at an attractive valuation with a 2.3 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations. Despite a 16.61% return in the past year, the company's profits have risen by 40.4%, resulting in a PEG ratio of 0.5.

Another positive aspect of JK Lakshmi Cement is its high institutional holdings at 36.7%. These investors have better capability and resources to analyze the fundamentals of companies compared to most retail investors. Overall, while the stock may have underperformed in the past year, it still has strong fundamentals and potential for growth in the long term.