SIP STOCK: Anil Singhvi picks Orient Cement, says investors must make it part of their portfolio

On his show today, Zee Business Managing Editor Anil Singhvi and his in-house panel picked Orient Cement stock from the Cement sector. This company is a CK Birla group company. It is a 42 year old company. The promoter background is extremely strong, considering their experience in the cement business. He said that cement prices are increasing consistently over some time now. The EBITDA per ton of the company is Rs 660, it has improved 57% in last 4 years indicating the strong fundamentals and financials of the company. Margins have improved to 23.5% in FY21 from 16% in FY16. Rakesh Jhunjhunwala holds 1.22% stake in the company. Shree Cements MD, bought 11.4 lk shares of the company on April 13, taking his stake to 5.33%. Orient cement has high growth and good expansion plans in future.

Research analyst Ashish said the trend in cement space looks favourable and the valuations are not factoring the Bull run as yet. The company is available at a good discount at this price. Q4 FY21 results are expected to be strong.

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Zee Business Managing Editor Anil Singhvi said that this is an excellent company with strong fundamentals and investors should have this company in their portfolio. He said that he is bullish on the cement sector and results of the last 2 to 3 quarters have been impressive for cement companies. Investors should understand and study the financials, how the margins and realizations of the company improved over a period in time.

Singhvi said that this is the cheapest stock in cement space and it will clock EPS of 11 this year. It is available at P/E multiple of 10. He said that the company is trading at a reasonable discount and there is good upside possible in this stock. There is a huge valuation gap considering the fundamentals of the company. Institutional Investors hold 25%-26% stake in the company.

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Singhvi said that Shree Cement is one of the top companies in cement space after Ultratech Cement when we look at profitability, ratios and various other factors. Operational Efficiency and performance of Shree Cement is best in cement space. Promoters of Shree Cement have bought 5.33% stake in Orient cement in the past 3 months. RK Damani found value in India Cement at Rs 80 and the stock price has moved up significantly after he bought, similarly Shree Cement promoters are seeing good value in Orient Cement, highlights Singhvi.  Cement sector has moved up sharply in the last one year. 

Singhvi said there may be possibility that Shree Cement may wish to add more stake in Orient Cement going further. There could be a possibility of good rerating in the stock.

Singhvi said the replacement cost of the company is Rs 180 and the current price is near Rs 100. This clearly indicates that Orient Cement is available at a good discount. There is deep value in the stock from a long term point of view, says Singhvi.