Ratio analysis, Cost of capital, stock behavior, Growth, External Funds Requirement.

1. J K Cement
• A leading grey cement producer in Nimbahera, Rajasthan India the
company is also the second largest manufacturer of white cement
in India, with an annual capacity of 4,00,000 tones, and valueadded building products, such as wall putty.
• J.K. Cement was the first Company to install a captive power plant
in the year 1987 at Bamania, Rajasthan. J.K Cement is also the
first cement Company to install a waste heat recovery power plant
to take care of the need of green power.
• J K cement is also the second largest producer of wall putty in the
country with an annual installed capacity of 300,000 tones.

2. Ratio Analysis (LIQIDITY RATIOS):
Year
Mar '13 Mar '12 Mar '11 Mar '10
Current Ratio=Curr. A/Curr. L
1.186392 1.19731 1.36792 1.14475
Quick Ratio=(Curr. A-Inv.)/Curr. L
0.7522583 0.83326 0.91699 0.76477
Cash Ratio=(Cash+mkt. Sec)/Curr. L
0.312827 0.06909 0.10547 0.12579
Net Working Capital Ratio
0.7905205 0.81555 0.61425 0.55231
Interval Measure Days
67.477488 27.0231 23.1646 35.2093
Interval Measure Month
2.2492496 0.90077 0.77215 1.17364
Interval Measure Quarter
0.7497499 0.30026 0.25738 0.39121
Interval Measure Half Year
0.3748749 0.15013 0.12869 0.19561

3. Ratio Analysis (LIQIDITY RATIOS):
• Current ratio for last four years has been average of 1.19 which is
good as assets are more than liabilities. For a manufacturing
company 2:1 is ideal ratio so still to improve.
• Quick Ratio has been kept around 0.8 for last few years at lower
than ‘1’ so that the company may really be prospering and paying
its current obligation in time if it has been turning over its
inventories efficiently.
• Interval Measure in 2013 it has been increased to 67 from average
of 25 days means it has increased its assets to finance its operation
for 67 days without outside help which is a good sign.
• Net Working Capital Ratio lower the ratio around 0.7 it shows the
higher the ratio, grater ability to meet current liability comparing
other firms.

4. Ratio Analysis (PROFITABILITY RATIO):
Year
Mar '13 Mar '12 Mar '11 Mar '10
Gross Profit Ratio=(Sales-COGS)/Sales
1.2469711 1.25461 1.25583 1.23792
Net Profit Ratio=PAT/Net sales
0.0802037 0.06968 0.02712 0.11007
Operating Profit Ratio=Op. Profit/Net Sales 0.1923172
Return of Capital employed = EBIT(1T)/D+E
0.146792003
Return on Investment = EBIT(1-T)/TA
0.204 0.11305
0.2155
0.14212 0.076283 0.140455
0.0822597 0.06799 0.02356 0.09509
Earning Per Share
33.4
25.36
9.16
32.32
Dividend Per Share
21.71
12.68
1.832
19.392
Divident Payout Ratio
0.65
0.5
0.2
0.6
Retantion Ratio
0.35
0.5
0.8
0.4
Return On Equity
0.1891342 0.17947 0.08947 0.20935

5. Ratio Analysis (PROFITABILITY RATIO):
 Gross Margin is high around 59% is an indicator of efficiency with
which management is able to produce each unit because they are
maintaining the competitive price.
 Net profit Margin is very low compared to gross. It is because high
debt and interest payment.
 Return on investment has increased in 2012 and 2013 but still 8-9%
is not a very good return as a manufacturing firm industry average is
13-14%. Interest burden has been headache for cement industry.
 Dividend pay-out ratio is kept high in 2011 in crises company
retained most of the earning part else more than half has been paid.
Shareholders are getting good return around 17+% from last 2 years.

6. Ratio Analysis (ACTIVITY RATIO):
Year
Mar '13 Mar '12 Mar '11 Mar '10
Inventory Turnover Ratio
6.9496609 6.98087 8.65921 9.99015
Days of inventory Holding
51.8010886 51.5694 41.5742 36.0354
9
8
4
8
Raw Material Turnover Ratio
1.52097159 1.45256 1.57588 1.71060
7
5
6
9
WIP turnover Ratio
14.5341 7.82888 9.38512
20.5850644
6
1
1

7. Ratio Analysis (ACTIVITY RATIO):
 Inventory turnover ratio has been decreasing from last four
years for 2013 it is almost 7 times a year which is somewhat
less the industry average of 8.5 accordingly inventory holding
period has also increased which needs improvement, but other
reason can be they have increased their production in
consecutive years.
 Raw material turnover ratio & WIP turnover Ratio are
constant over the few years that mean their production process
has been working at desirable expectation but selling is less
compared to production. However WIP turnover Ratio has been
increased phenomenally that can be the reason of less sells
compared to fast production.

8. Ratio Analysis (LEVERAGE RATIOS
& VALUE
RATIOS):
LEVERAGE RATIOS
Debt Equity Ratio=TD/equity
Fixed Asset Ratio= Fixed A./CE
Interest Coverage Ratio=EBIT/Int.
Debt to capital Ratio = D/E+D
Debt to asset =TD/Total Asset
VALUE RATIO
Price To Earn Ratio
Market to Book Ratio
Tobin's Q
Mar '13 Mar '12 Mar '11 Mar '10
0.6726739 0.70591 0.94289 0.75563
0.8485436 1.00092 0.96149 1.01288
3.4360606 2.97991 1.53878 5.39032
0.4021548
0.4138
0.4853 0.43041
0.4021548
0.4138 0.48531 0.43041
Mar '13 Mar '12 Mar '11 Mar '10
7.9041916 6.66404 15.2347
5.5229
7.6051446 6.41149 5.95309 8.01874
0.65021337 0.45306 0.35900 0.52518
1
9
2
3

9. Ratio Analysis
(LEVERAGE RATIOS):
 Debt to Equity Ratio compared to cement industry d/e ratio is kept
at 0.8 which can be called very well; in case of urgency company
can raise loan, same in case of Debt to Capital Ratio.
 Interest converge ratio is 3.4 rupee last year which is also good
firm is able to meet the Interest obligations.
(VALUE RATIOS):
• M/B ratio is always 6+ over the time. A company with a very
high share price relative to its asset value, on the other
hand, is likely to be one that has been earning a very high
return on its assets.
• Q ratio < 1 over the time means the stock is undervalued.
• P/E Ratio is 7 in 2013; Investors in the stock are willing to
pay 7rp for every 1rp of earnings that the company
generates. However, this is a far too simplistic way of
viewing the P/E because it fails to take into account the
company's growth prospects.

10. IPO
 The company, a leading grey cement producer in Northern
India, had entered the capital market in 2005 with a public issue
shares at a price band of Rs 145 to Rs 155.
 The issue opened on February 21 and close on February 24,
2005 and subscribed 1.8 times.
 At the issue price of Rs 148, the company mobilized Rs 296
crore.
 Stock started trading in BSE on 14 Sept, 2005. Opened at 151
Rp and gave the around % return to investors.
 In two years of listing price highest went up to 191Rp in May,
2006. and came back to 149 Rp after two year. Today’s price of
stock 187.25.

11. Share price
J.K.Cement
₹ 400.00
₹ 350.00
₹ 300.00
₹ 250.00
₹ 200.00
₹ 150.00
₹ 100.00
₹ 50.00
₹ 0.00
Beta = 0.56
All Time High:
24dec,2012 (375)
BSE
25000
20000
15000
10000
5000
0
All time low:
2 March,2009 (35.35)

12. 1/2/2014
12/2/2013
11/2/2013
10/2/2013
9/2/2013
8/2/2013
7/2/2013
6/2/2013
5/2/2013
4/2/2013
3/2/2013
2/2/2013
1/2/2013
12/2/2012
11/2/2012
10/2/2012
9/2/2012
8/2/2012
7/2/2012
6/2/2012
5/2/2012
4/2/2012
1/2/2014
12/2/2013
11/2/2013
10/2/2013
9/2/2013
8/2/2013
7/2/2013
6/2/2013
5/2/2013
4/2/2013
3/2/2013
2/2/2013
1/2/2013
12/2/2012
11/2/2012
10/2/2012
9/2/2012
8/2/2012
7/2/2012
6/2/2012
5/2/2012
4/2/2012
JK Cement
400
350
300
250
200
150
100
50
0
NSE
Beta = 0.72
7000
6000
5000
4000
3000
2000
1000
0

13. 15-Jul-13
6.50
Dividend
23-Jul-12
5.00
Dividend
18-Jul-11
2.00
Dividend
16-Jul-10
3.50
Dividend
11-Nov-09
2.50
Dividend
20-Jul-09
3.50
Dividend
Dividend

14. SUBSTANTIAL GROTH
SUBSTANTIALGROTH
Year
Growth = (ROCE + D/E(ROCE-i(1-T)))*
RR
Mar '13
Mar '12
Mar '11
Mar '10
6.62%
8.97%
7.16%
8.37%

15. FUNDS REQUIREMENTS
FUNDS REQUIREMENTS
Year
Mar '13
Mar '14
Net Fixed Asset
341.07
341.07
Total Current Assets
909.11
909.11
Net profit Margin
6.97%
6.97%
2014
2015
12.14%
12.01%
3757.418
4208.85
-63.77795
100.6932
Year
expexted sales groth
expexted sales
fund req = T.CA(s1-s0)/s0 + FA(s1sFC)/sFC -L0(s1-s0)/s0-NPM*RR*s1
* Assuming Full capacity utilization in current year
* Keeping same Profit margin and Retention ratio for net year

16. COST OF CAPITAL
COST OF CAPITAL
Current cost of capital
Rf
beta
Market return
Cost of equity (Ke)(as per CAPM)
7%(taken)
0.564736(calculated)
13.13%(calculated)
10.51406%
cost of debt(Kd)(after tax)
8.38%
Cost of capital= ke*e/d+e + kd*d/d+e
9.66%
Change in debt/Equity ratio
d/e ratio
Cost of capital= ke*e/d+e + kd*d/d+e
-10.00%
10%
0.6054065
0.739941
41.34%
39.31%