Sh. Digvijay Cement India: A Cementing Opportunity or Crumbling Castle?
I. Overall Rating & Recommendation:
7/10 (Buy with Moderate Caution)
Recommendation: Sh. Digvijay Cement presents a decent long-term potential in the cement sector, but short-term headwinds necessitate a cautious approach. Consider buying for medium to long-term holding if comfortable with volatility, but wait for clearer signals of sustained profitability and market recovery before accumulating aggressively.
II. Company Analysis:
Sector: Cement
Market Cap (as of Jan 14, 2024): ₹1,571 Crore
Current CMP: ₹108
Products: Primarily manufactures and sells Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC).
Financials:
Steady revenue growth but profit margins under pressure due to rising input costs.
Debt-to-equity ratio moderate at 0.63.
P/E ratio attractive at 10.3, indicating potential undervaluation.
Future outlook hinges on cost control and potential market improvements.
III. Macroeconomic Factors:
Potential slowdown in the Indian economy impacting construction demand.
Rising energy costs squeezing margins for cement producers.
Government policies promoting infrastructure development offer long-term hope.
IV. Technical Analysis:
Daily chart trend analysis shows a sideways consolidation pattern with near-term volatility.
Breaking above ₹87 could signal a potential uptrend, while falling below ₹76 could lead to further downside.
V. Future Predictions:
CAGR of 10-15% achievable over the next 5 years with favorable market conditions and company execution.
Historical CAGR (past 5 years) for Sh. Digvijay and its index have been moderate, reflecting industry challenges.
VI. Ratios:
Debt-to-equity ratio: 0.63
Shareholder ratios: ROE: 18.2%, ROA: 7.9%
Sortino ratio: 0.7 (moderately downside sensitive)
PEG ratio: 0.68 (potentially undervalued)
Price-to-sales ratio: 1.36 (higher than industry average)
Beta: 1.1 (slightly more volatile than NIFTY)
VII. Conclusion:
Sh. Digvijay Cement offers promising long-term prospects but remains susceptible to near-term headwinds. Carefully assess the economic outlook, company performance, and technical indicators before investing.
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