Keerthi Industries is a stock in cement space. The company is in Nalgonda district which is near to Amravati city. Company has high debt but through financial structuring, its Interest coverage ratio is good. Also, its margins are amazing. June qtr is generally not a good quarter for Cement companies but even then it reported good sales increase compared to Mar qtr. March qtr was also very good. In June qtr, it used bigger part of profit to pay debt so profit was little less than March qtr.
Overall you will find that debt is not a problem when earning is visible. When interest coverage is already good then we are almost safe from any downside. Location is a big advantage. In that area, all companies are doing good. NCL industries is another good investment from that area.
One disadvantage of Keerthi is its low floating market cap. 75% is owned by promoters group. High ownership is assuring but this resulted in low liquidity of stock. This disadvantage cannot change.
It has given 10 times in 52 w, so currently resting but this has given a buying window for us. Even at consolidation phase, it is going up. Coming result will cement its turnaround and will be a strong trigger.
Another segment it is in its Circuit board. It got order from defense. Stock in defense is trading high. In future, if it can get another order like that then we can’t say what high valuation it can command.
It is trading at very low PE of 4. P/B ratio is high- 5. But seeing its operating margin, that is not a big deal.
Remember – before bifurcation of state, development became standstill due to protests. Govt spending became low. With that economic downturn has resulted in big loss to cement companies in that area. High power cost added worry to cement companies. Now, coal is also cheaper. Both newly formed states are big on development agenda and going good.
Overall revival in reality space will take time but in that part of India, reality and infra is state reason.
Only big thing unknown to me which can help me guage more of coming profit is utilization rate at present.
Disclosure: invested here. And NCL ind.
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