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Summary
of Contents
STOCK UPDATE
JK Cement
Cluster:
Cannonball
Recommendation: Buy
Price target:
Rs295
Current market price: Rs165
Management meet note
We recently
met the management of JK Cement (JKC) and the key takeaways from the
meeting are discussed below.
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During FY2007 JKC mobilised Rs290 crore through
a follow-on public issue for its capital expenditure (capex)
needs. As per its capex plan, the company is enhancing the
production capacity of gray cement and white cement, setting up a
20-megawatt pet coke-based captive power plant (CPP), replacing
the existing 7.5-megawatt thermal power turbine with a 10-megawatt
turbine and installing a waste heat recovery (WHR) power plant.
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The commissioning of the three power plants is
on track and the management expects savings of Rs48 crore for
FY2008 and of Rs72 crore for FY2009.
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The expansion of the capacity of its gray
cement and white cement plants to 4 million tonne (MT) and 0.4MT
respectively has been completed and the benefits of the same will
start reflecting from Q2FY2007.
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The WHR plant, which will generate power out of
the hot gases emitted during the production process at the current
facilities, will entitle JKC to sell carbon credits. The project
has already been approved by the UNFCCC and the company expects
decent savings from the sale of carbon credits after the
implementation of the project by June 2007.
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To diversify its presence in India, JKC is
setting up a greenfield gray cement plant of 3MT capacity at
Mudgal, Karnataka, at a cost of Rs750 crore. The plant is expected
to start commercial operations by December 2008.
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JKC has acquired 100% holding of a group
company, JayKay Cem, at a nominal cost of Rs5 crore. JayKay Cem
holds limestone-mining rights, which will be utilised for JKC's
greenfield Karnataka plant. JKC will eventually merge this company
with itself, which will be positive as it would allay the fears
that JKC may have to buy limestone from a group company at a
higher price.
SECTOR
UPDATE
Telecom
GSM records its highest ever
additions
The upswing in the Indian wireless telephony
service industry continued with the addition of a brilliant 5.9
million new users during August (a growth of 5.1% over August 2006),
taking the total user base to 120.6 million. The falling tariffs and
lucrative offers by the service providers continue to attract new
mobile customers. Both the GSM and the CDMA segment rendered strong
performances in the month.
MUTUAL
FUNDS: WHAT'S IN—WHAT'S OUT
Fund Analysis: September
2006
An analysis has
been undertaken on equity and mid-cap funds' portfolios, indicating
the favourite picks of fund managers for the month of August 2006.
Equity funds comprise of all diversified, index, sector and tax
planning funds, whereas mid-cap funds include a universe of 17 funds
such as Reliance Growth, Franklin India Prima Fund, HDFC Capital
Builder, Birla Mid-cap Fund
etc. |
