INSUBCONTINENT EXCLUSIVE:
JK Cement plunged as much as 12.32 per cent to hit a 52-week low of Rs 2,313.20.New Delhi: Cement manufacturer JK Cement has announced its
foray into the paint business
The company's board had met on Saturday and cleared the proposal to enter the paint sector with an investment of Rs 600 crore infused over a
period of five years.JK Cement will enter the paint business through a wholly-owned subsidiary.The share of the cement manufacturer plunged
as much as 12.32 per cent to hit a 52-week low of Rs 2,313.20 during intraday deals on Monday
Though, the stock settled 11.50 per cent lower at Rs 2,334.90 on the BSE index.JK Cement cracked 11.31 per cent to close at Rs 2,341.20 on
NSE.Here's What Brokerages Said:Kotak Institutional Equities: "Strong volume-led growth potential, pricing power, improving return ratios
(notwithstanding near-term inflationary pressures), and high valuations of the decorative paints industry have attracted three new players
(JSW group, Grasim and now JK Cement) in recent years
The company has some access to the paints dealer network through putty distribution; however, it won't be easy to establish itself in
decorative paints in view of rising competition and inherent challenges
Consumers' trust in existing brands and an infrequent purchase cycle makes it difficult for new entrants to gain share in mid-to-premium
emulsions that command the bulk of the profit pool
We expect JK Cement to scale up gradually at best."Emkay Global Financial Services: "The paint business via wholly-owned subsidiary would
undertake manufacturing, selling, trading, importing - exporting, and otherwise dealing in all types of paints and allied products and
The creation of a subsidiary should enable a singular focus on the paint business
JK Cement is aiming to produce various products (including value-added) and targets revenues of Rs 850 crore in the next five years
We believe that the establishment of a management team, the creation of stronger brand equity and investment in tinting machines remain key
We have a 'Hold' rating on the stock with a target price of Rs 3,150
We have not incorporated the paints business into our estimates."
