J K Cements (JKCEMENT)

FairStock Score: 57/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Strong growth: sales up 17.65%, profit up 41.56%, and 5-year revenue CAGR of 12.45%
• Decent return ratios: ROE 16.75%, ROCE 13.99%, and Piotroski F-Score of 8/9
• Solvency manageable: Altman Z-Score 3.22, D/E 1.00, and promoter holding at 45.66%
• Latest quarter sales of ₹3,463 Cr and net profit of ₹174 Cr show continued momentum

Concerns

• Extreme valuation: P/E 41.59, P/B 7.36, EV/EBITDA 164.94, and PEG 4.06 against a market cap of ₹43,703 Cr
• Deeply negative margin of safety: Graham Number ₹1,529.56 vs price ₹5,797.95 (-269.78%), and DCF intrinsic value ₹105.77
• Weak cash generation: FCF only ₹49 Cr and dividend yield 0.27%, so reported profits may not be converting into shareholder value
• Cement cyclicality: 52-week range shows sharp swings, and the market may be paying peak multiples for peak earnings

AI Analysis

When I look at J K Cements, the first thing I see is a decent business with a solid recent record, but at a price that makes my Graham instincts recoil. The company has grown revenue at 12.45% annually over five years, and the latest quarter shows sales of ₹3,463 Cr and net profit of ₹174 Cr. Profit jumped 41.56% and sales 17.65% — impressive for a cyclical cement player. Return on equity is 16.75% and ROCE 13.99%, while the Piotroski score of 8/9 suggests operational health. Debt-to-equity of 1.00 is acceptable, and Altman Z of 3.22 indicates solvency. Promoters holding 45.66% is a positive alignment signal. But valuation? P/E of 41.59, P/B of 7.36, EV/EBITDA of 164.94. That is not a margin of safety; that is a margin of hope. Graham's number, based on book value and earnings, is ₹1,529.56 — the stock trades at ₹5,797.95, leaving a margin of safety of -269.78%. Even using a simple DCF, the indicated intrinsic value is ₹105.77. Now, I treat DCF as a rough guide, but the gap is enormous. Free cash flow is only ₹49 Cr, and the dividend yield is 0.27%, so the shareholder is being paid little while waiting for growth. The 52-week range of ₹4,670.05 to ₹7,565.50 reminds me that cement earnings swing with the cycle; at this price, the market seems to be paying peak multiples for peak earnings. I can admire the business metrics — the F-score and steady growth — but a wonderful business with no margin of safety is not a wonderful investment. If I owned it, I would watch whether cash generation catches up to reported profits and whether cement demand continues to justify this premium. For now, I would keep my wallet firmly closed and wait for Mr. Market to offer a saner price.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer