The cement industry is a key sector in India, playing a vital role in the country’s infrastructure development and economic growth. As the second-largest cement producer globally, India accounts for around 7 percent of the world’s cement capacity.
Moreover, the cement industry is expected to continue expanding, with production forecast to reach 550 to 600 million tonnes per annum by 2025. This growth will be fueled by increasing housing, commercial, and infrastructure development across the country.
The PEG ratio, which stands for Price/Earnings-to-Growth, compares a company’s Price-to-Earnings (P/E) ratio to its expected rate of growth. When the PEG ratio is below 1.0, it suggests that investors may be paying less per unit of earnings growth, making the stock potentially undervalued.
Listed are such Cement stocks with a PEG ratio of less than 1:
ACC Ltd
With a market capitalization of Rs. 51,000 crores, the shares of ACC started Tuesday’s trading session on a higher note at Rs. 2,707 compared to its previous close of Rs. 2,695.70. During the trading session, the shares hit a high of Rs. 2,744.25, gaining around 1 percent and closed the day at Rs. 2,715.85 apiece.
Looking at the company’s financial performance, the revenue increased by 10 percent from Rs. 4,914 crores during the December quarter to Rs. 5,409 crores in the March quarter. In addition, the net profits zoomed by 76 percent from Rs. 538 crores to Rs. 945 crores during the same period.
In terms of key financial metrics, the company reported a return on equity of 14.30 percent and a return on capital employed of 15.45 percent for the period spanning FY23-24. Additionally, the net profit margin stood at 11.64 percent during the same timeframe.
Furthermore, the share is considered to be undervalued as the PE ratio stands at 23.65 times compared to the industry average of 30.45 times and the PEG ratio stands at 0.07 times, which means the market has underestimated its value with its projected earning potential.
Shree Digvijay Cement Co. Ltd
With a market capitalization of Rs. 1,698 crores, the shares of Shree Digvijay Cement started Tuesday’s trading session on a flatter note at Rs. 116 compared to its previous close of Rs. 114.95. During the trading session, the shares hit a high of Rs. 118.80, gaining around 1 percent and closed the day at Rs. 115 apiece.
Coming onto the company’s financial performance, the revenue surged by 17 percent from Rs. 191 crores during Q3FY24 to Rs. 224 crores in Q4FY24. On the other hand, the net profits increased by 3 percent from Rs. 31 crores to Rs. 32 crores during the same period.
In terms of key financial metrics, the company reported a return on equity of 23 percent and a return on capital employed of 30.30 percent for the period spanning FY23-24. Additionally, the net profit margin stood at 11.08 percent during the same timeframe.
Furthermore, the share is considered to be undervalued as the PE ratio stands at 19.4 times compared to the industry average of 30.45 times and the PEG ratio stands at 0.39 times, which means the market has underestimated its value with its projected earning potential.
With a market capitalization of Rs. 10,250 crores, the shares of JK Lakshmi Cement started Tuesday’s trading session on a flatter note at Rs. 889.45 compared to its previous close of Rs. 888.55. During the trading session, the shares hit a low of Rs. 867, losing around 2 percent and closed the day at Rs. 871 apiece.
Looking at the company’s financial statements, the revenue jumped by around 5 percent from Rs. 1,703 crores during the December quarter to Rs. 1,781 crores in the March quarter. Additionally, the net profits improved by 8 percent from Rs. 150 crores to Rs. 162 crores during the same timeframe.
In terms of key financial metrics, the company reported a return on equity of 14.80 percent and a return on capital employed of 15.57 percent for the period spanning FY23-24. Additionally, the net profit margin stood at 7.19 percent during the same timeframe.
Furthermore, the share is considered to be undervalued as the PE ratio stands at 22.03 times compared to the industry average of 30.45 times and the PEG ratio stands at 0.74 times, which means the market has underestimated its value with its projected earning potential.
Written By Vaibhav Patil
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