Cement situation in South India is not good overall. There is huge excess capacity in south India. Some numbers – National capacity is around 373 mtpa and south India has 139 mtpa and utilization level are only 48%.
Industry is embracing concerted action by competing players to keep prices high.
Have a read Outlook Article in South Cement situation
This does not look to me as a sustainable situation or sound basis for value investing.
Seems a decent pick. I’m from Andhra Pradesh. Given the thrust on Infrastructure and construction going on in the region of Amaravati by Govt. of AP, cement companies on the whole may see a revival in their fortunes.
I can give a better feedback once I look at the financials and study the sector. Thanks again for the pick
I would suggest identify categories and group companies according to them. find out market capacity and export possibilities
glad i exited this one. dug deeper after investing and the political links made me uncomfortable. too many lucky exits in my portfolio to make me uncomfortable – Poly, TRF, TIL, Vulcan.
memo to myself: 1. even small holdings for “watching” the stock can be dangerous. 2. must stick to the gems I hold 
I was expecting some expert feedback. But no reply till now.
Another company from that area (Talangana and AP) I have selected was Anjani Portland cement. But here debt and valuation was not very good as in Keerthi and NCL ind. Sagar cement is in radar. If it won’t gain big then I may buy that after this quarter result. HDFC sec has given coverage on Sagar Cement recently. Don’t not checked from a mouth.
Uploading… Now whats really going on here? Any one interested in looking at this and passing relevant statements. I am not that bullish on the company forget the stock.
EPS not good and growing
I see that the Promoters have pledged / encumbered 6 million shares over the past one year as shown in the results – (page 2 of the link – Kitex Q2FY16 rsults). But the shareholding pattern shares filed with the BSE does not show any such pledges / encumbrances (page 5 of the link – SHP 092015)
I do not know which one to believe; but if 6 million shares ~ 24% of their holding, are pledged then it means shares worth Rs 450 crores are pledged (assuming Rs 750 per share). Even at a margin of 50% a sum of Rs 225 crores is probably kept as a line of credit for promoters. We do not know how much of this line has been used.
Over and above this irreconciliable filing, this raises a few questions. One of the promoters of Kitex Garments is Kitex Childrenwear Ltd, which in turn, is apparently fully owned by other Promoters and which is under consideration for a merger with Kitex Garments. So it is possible that Kitex Childrenwear Ltd may use this line to borrow and increase its own valuation creating a fair-value swap ratio that is unfavorable to minority shareholders of Kitex Garments. Imagine I own a listed Company A and an unlisted Company B. Further Company B also owns Company A. Now Company B borrows against the shares of Company A that it owns and uses this capital to increase its valuation (essentially high leverage with low equity to improve valuation metrics) relative to Company A. Consequently when a merger is considered Company B will get a more favorable swap ratio; and upon merger shares held by Company B in Company A is cancelled and I will get more shares in Company A than if Company B had not pledged its shares. In other words I am indirectly using via Company B the value of Company A to enrich myself at the cost of other shareholders of Company A.
What happens if Company B’s borrowings (against Company A shares) default? The lender will simply liquidate the pledgee shares; the shares will tank and the risk will be borne by everyone.
Of course to be sure we do not know how and how much of this pledge is used, but the potential risk to minority shareholders is real.
I think that after a person takes a position in a stock, researching it is needed and no activity required, recently when it came down to its 200DMA, I purchased additionally, just to keep myself more invested at lower rates, imagine a growth stock trading at DMA’s, when did that happen, they fly high and growth on the stock market is exponential.
Keep the faith and add more on declines once the initial hypothesis is good, we are not CNBC guys to judge companies on Earnings and opinion. We are the real investors and know the company in and out what it plans to do ,what is expected out of it and what industry can be like.
Sorry !
Anbody having trading account with Motilal Oswal must have received the invitation for the concall and details.
The concall has been arranged by Motilal oswal on Friday at 12:00 pm.
From Kitex garments participants are
Mr Sabu Jacob – Chairman & MD
Mr Boby Michael – GM Finance
Anybody from the forum must have received the invitation for the concall.
Regards,,