RK Damani Stocks: This cement company shares can gain show to 65% potential growth on strong fundamentals and outlook

Ace investor Radhakishan (RK) Damani’s one of the favourite stocks in the portfolio – India Cements Limited shares may surge up to 65 per cent on robust fundamentals and business outlook, a report by Market Wizard said while listing key triggers for the company. 

RK Damani, who also owns a retail chain Avenue Supermarts under the brand name DMart, holds about 39,281,694 equity shares, which translates to a 12.7 per cent stake in India Cements, as per the March shareholding pattern of the company available on the BSE. 

Fundamentally, the company has a market capitalization of around Rs 5,000 crores with an equity size of 30.99 crores outstanding shares with a face value of Rs 10. The share trades around 0.5-1x the book value at a PE Ratio of 64.58 times as of March-2022 against the Industry PE of 21.51x. 

The company has been continuously reporting ROE in the range of 1-4 per cent over the years while ROCE stands in the range of 4-7 per cent and net profit has been growing at a CAGR of around 44.79 per cent over the past 3 years. 

Similarly, India Cements’ debt to equity ratio stands at 0.53 times indicating negligible debt in the Company and has been continuously announcing dividends over the years. 

The FY22 March quarter performance of India Cements got impacted due to the sharp increase in the cost of production and loss of volumes and the volume recovery was slow in the southern markets after extensive rains and floods in the previous quarter, the report said. 

Due to the increase in prices of fuel and power the company expenditures were increased, and the management guided for a price hike of Rs 35/bag in June 2022 in two parts, which will be followed by Rs 20/bag hike in July 2022. 

In the next 15-24 months, the counter may see hitting targets of Rs 200; Rs 224; Rs 244 and Rs 265 per share (Upside of up to 65 per cent). The stock is recommended to accumulate on dips till Rs 130 per share and suggested a stop loss of Rs 115 per share. 

The scrip on Friday closed over 2 per cent lower to Rs 161.90 per share on the BSE as compared to a 1.84 per cent fall in the S&P BSE Sensex.