They are not that kind. Very conservative guys unfortunately. Before first quarter results they gave flattish guidance and they ended up posting a bumper quarter. Volumes are increasing and you should see some jump in revenue as new capacity comes on stream and existing capacity is utlized. Thing is you can make unjustified amounts of wealth in a cyclica play. But for that timing is more important than the company. In the case of KCP we have chosen a company that is anyway undervalued that could ride the cycle along with strong profits from sugar in vietnam. So our downside is limited should the cycle not pick up. Should the cycle work out we stand to make alot of money, hopefully the company is noticed and not looked at as a conglomerate. Anway if earnings grow at to 150-200cr in 3 years (both from cement and sugar) maintaning the same PE or a slight derating we will stand to make a solid return…Coming to downside personally I wouldnt be worried about KCP. Unless there is some unforseen circumstance we shouldnt lose capital here. They have survived through the worst period in apt so they should be fine. Market just has to take a look at them. Some reputed brokerage will have to initiate coverage on them…
I think being conservative isnt unfortunate.It is difficult to find such companies.This is one of the biggest reason for my investment.Ideally companies should work on making their business strong and not worried too much about marketing.However, I do believe they need not market themselves but be more vocal about what they are doing - to bring more transparency to share holders.If we see cement business overshadowing others - there is a high probability of demerger and hence value unlocking - but again thats on a long run.
Here are the latest pics of Polavaram project. One of the largest irrigation project of India. Though the Central Govt. is doing its level best to stop the project for political reasons… the work is going on at a brisk pace. Concrete work is going on… This project alone requires huge quantity of Cement.
It’s nice that you have shared this pics
But can we say that KCP will be benefitted next of this development
We aren’t sure who is the supplier
Good price movement today
Any positive news impacting cement business ?
The whole point is… if overall cement utilisation/demand in the region goes up, the industry benefits from it. This augurs well while capacity is being expanded. KCP is one of the cement providers for polavaram project. Don’t really know what is its share though.
Also, KCP Limited has signed a MoU with Govt. of AP to supply cement through water ways to the capital construction as the Muktyala plant and Amaravathi are located on the banks of Krishna River …The total distance from the plant to Amaravathi is reduced to 70 kms by water from 140 kms by road.
Most of the dams in AP region are built with KCP Cement… Polavaram is included.
where did you get this update of waterways from? Would be helpful if you could share the source or full article - thanks .
As a note: (This is my understanding - I can be wrong).
Are these operational pictures or promotional (i.e. computer generated)?
The last pic definitely looks photo shopped; based on the way ‘KCP Limited’ label is placed. The barges look to be of European setting on the canals around there.
The penultimate pic; searching the area via google maps (satellite mode), there is no sign of a ‘hub and loading station’ around Muktyala. [Satellite images could be dated]
Even my understanding is that this is just a concept at this stage… Given the cost savings and upcoming huge demand @ Amaravati, this should be a reality soon.
Please go through the below link… work on the waterway is already started… AP Govt. is serious on developing Inland Waterways…
At around 1800-2000cr cement business conservatively looks fairly valued, considering growth prospects. The sugar business is not yet valued, that in itself generates substantial profits for the group. That business alone should generate 100cr in net and has capex slowly coming on stream. Valuations are still in favour. Stock has been discovered I would like to say, through the recent run up. I still cant find any coverage on it though…
KCP was recently recommended by Mr. Rajnish Sharma aka valine. He has great fan following on moneycontrol and all stocks recommended by him are multibeggar last year. I don’t believe in blindly following anyone as such. I am adding this comment only to point out one of the reasons why this stock has been in discussion now a days.
Disc : Invested at about 130
KCP seems to be a good recommendation. Cement is one of their major business. KCP Shrestaa cement brand is sold across Telangana, Andhra Pradesh, Karnataka, Tamil Nadu, Kerala. With great projects in plan and currently being executed in Telangana/Andhra the stock would be a good bet. Also we could take into consideration of huge infrastructure demand in the coming years
Disc : Invested at about 101
Similar thesis for the other AP/Tel cement company, NCL Industries. Deeply discounted on EV/ton basis and just finished expanding capacity. Also recent raised funds through equity so interest cost will come down substantially.
Raising through equity dilution will decrease eps anyway. Plus these guys have a massive sugar business in vietnam that nobody values. Its funny because that business pulls in big money and has capex almost complete.
Even assigning that business nil value, we still get teh cement business at a discount, assuming avg buy of 125. As of now I think cementbusiness is fairly valued. Sugar however is not. Still feel the whole company is cheap and odds are very much in favour.
People from construction industry have said that cement and steel prices have increased by 30-35% during the ongoing CREDAI event at Vijayawada. No other source to validate this…
I am attaching the affordable houses being built by GoAP. These are being built in all major towns/ tier 2 cities… Govt has completed major chunk of these… they are planning to spread these to much smaller places.
Today - KCP released SHP for december. Reducing pledge amount first -
- September - 49,00,000 or 8.53%
- December - 31,00,000 or 5.40%
It has come down to 5.40% from 8.53%.
Can someone explain what happens when pledge is reduced - i am sure they are released from bank or whichever organization keeps them. But what happens after that ? The promoter gets to keep it ? I am trying to link this to liquidity.
also HDFC has almost doubled from 13 lakhs to 24 lakhs i think from SBI in last quarter.
This does not forms the basis of my investment but it helps to get a clear picture.
Q2 Concall Summary
First half was much better than last year.
PBT was Rs 84 crore (against Rs 19 crore).
PAT was 60.13 crore (against Rs 14 crore).
The profits includes dividend of Rs 38 crore which it received from its subsidiary abroad. However without the dividend also the performance is encouraging.
In cement the current capacity is (2 units in AP), one unit in Muktyala near new capital of AP has capacity of 1.8 million tons of capacity and another 0.8 million tons at the plant near Nagaarjun dam. The company is adding 1.5 million unit to the 1.8 million plant unit. So after expansion will be 4.2 million tons. The expansion is progressing very well. The official completion date is October 2018. Revenues from the expansion will start from October 2018. The total cost of the expansion is Rs 500 crore, including railway siding of Rs 60 crore.
The management does not have any plans for further expansion in cement.
Demand for cement continues to be good in the area it operates. The realisations are stabilizing though they are not as good as Q1. Volume growth during the quarter was 20% in cement business.
80% of the cement sales is in AP and rest goes to TN. Freight and forwarding expenses have grown significantly as the company started to bill invoicing with tax.
The order book in engineering division is Rs 100 crore. Things have started looking up. Make In India concept is helping this division. In future the unit should look better and do better from next FY.
The engineering division should break even on sales of Rs 85 crore.
Hotel yoy losses fell during the quarter as occupancy has improved substantially. If this continues, the performance should improve further.
The management had made a statement 2 years ago in the AGM that it will sell the hotel business. But as of now the company is not thinking anything on those lines.
Vietnam capex from 6000 tons to 8000 tons is already done and is already on stream. Further capex will be completed as said in FY 2018-19 (mostly likely by the end of calendar 18 from 8000 tons to 10000 tons).
Power segment is doing losses because of input cost. This is not because of performance, which is doing very well but because of the rise in coal price which has grown from $ 48 to $ 80.
The company has Rs 350 crore of outstanding term loan as on Sept 2017 without considering Rs 35 crore working capital loan.
Cash and investment is Rs 25 crore.