Indian stock markets have witnessed an extremely volatile trade in the month of February so far, mainly due to the global sell-off, further augmented on the worries after Finance Minister Arun Jaitley introduced a 10% tax on LTCG on equity over 1 lakh. During the heavy sell-off period, foreign institutional investors pulled around Rs 3,800 crore from Indian equities in the first seven days from 1 to 9 February 2018. Earlier in January last year, foreign portfolio investors infused an amount worth Rs 13,780 crore. On Monday, 12 February 2018, Indian markets took a breather after a sharp recovery in the major Wall Street indices and on the back of positive cues from European markets.
Amid the choppy trading sessions in domestic markets, we bring to you 2 cement stocks which have doubled investors wealth in last 2 years to buy and gain up to 35%. Shares of JK Cement and Ramco Cements have doubled in the period of last two years with the stock of JK Cement returning more than 100%.
JK Cement – Axis Securities
Shares of JK Cement have returned about 133% in the last 24-month horizon to Rs 1,026.5 from a price level of Rs 440. The research and brokerage firm Axis Securities has given a buy rating with a target price of Rs 1,357, which implies an upside of about 32% from the current market price. “We prefer JK Cement in midcap cement space due to its high-margin white cement/putty business and low capex expansion. Debt/equity & debt/EBITDA are at reasonable level of 1.4x & 3.2x on FY18 basis,” Axis Securities said in a research report.
Ramco Cements – Axis Securities
Shares of Ramco Cements have risen about 99% in the last 2 years to Rs 735.25 from a price level of Rs 370. Axis Securities has given a buy rating with an upside of 14% to a target price of Rs 833 from a recommendation price of Rs 732. “We revise our EPS estimates to factor in the lower realization. Our revised EPS estimate for FY18/19/20 stands at Rs 26/31/38 (vs. Rs 27/32/40 earlier). Maintain BUY with revised target price of Rs 833 (Rs 872 earlier) based on 13x FY20 EV/EBITDA (14% above CMP of Rs 732),” Axis Securities said in a research report.
Earlier yesterday, shares of heavyweight companies such as HDFC twins, RIL drove Sensex to log a 295-point gain on Monday with Nifty ending near 10,500 while shares of Tata Steel and Bank of Baroda rose up to 9%. The S&P BSE Sensex gained 294.71 points or 0.87% to finish at 34,300.47 and NSE Nifty jumped 84.8 points or 0.81% to conclude at 10,539.75. Shares of Tata Steel, Bank of Baroda, Marico, Bajaj Finserv, PNB, Power Grid, Yes Bank, IndusInd Bank, UPL and BHEL advanced 2-9%. A market-wide recovery was seen in the Indian equities as all the broader indices and nine sectoral indices settled in green. Among the A group of shares on BSE, stocks of L&T Technology Services, Shipping Corporation of India emerged as the top gainers surging 10-12% while the stock of Fortis Healthcare, Hexaware Technologies lost 3-6%.