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June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

CORPORATE FINANCE:
RESEARCH PROJECT
ON

SUBMITTED BY,
ADARSH S P
ARCHIT MITTAL
ARIJEET PAL
PALASH AGARWAL
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

INTRODUCTION

J.K. Cement Ltd is an affiliate of the multi-disciplinary industrial conglomerate J.K. Organisation which was
founded by Lala Kamlapat Singhania. For over four decades, J.K. Cement has partnered India's multi-
sectoral infrastructure needs on the strength of its product excellence, customer orientation and
technology leadership. The company has over four decades of experience in cement manufacturing. Their
operations commenced with commercial production at first grey cement plant at Nimbahera in the state
of Rajasthan in May 1975. Subsequently the company also set up 2 more units in Rajasthan at Mangrol and
Gotan. In the year 2009 the company extended its footprint by setting up a green-field unit in Muddapur,
Karnataka giving it access to the markets of south-west India. Today J.K. Cement has an installed grey
cement capacity of 10.5 MnTPA making it one of the leading manufacturers in the country.

The company is the second largest manufacturer of white cement in India, with an annual capacity of
600,000 tonnes in India. They are also the second largest producer of Wall putty in the country with an
annual installed capacity of 700,000 tonnes. J.K. Cement was the first company to install a captive power
plant in the year 1987 at Bamania, Rajasthan. J.K Cement is also the first cement company to install a
waste heat recovery power plant to take care of the need of green power. Today at its different locations,
the company has captive power generation capacity of over 140.7 MWs which include 23.2 MW of waste
heat recovery power plants.

The company has made its first international foray with the setting up of a green-field dual process white
cement-cum-grey cement plant in the free trade zone at Fujairah, U.A.E to cater to the GCC and African
markets. The plant at Fujairah has a capacity of 0.6 million tonnes per annum for white cement with a
flexibility to change over its operation to produce up to 1 million tonnes per annum of Grey Cement. The
commercial production from Fujairah Plant started from September 2014. With this, J.K Cement Ltd has
become the second largest White Cement Producer in the World.

Backed by state-of-the-art technology, access to the best quality raw materials and highly skilled
manpower against the backdrop of India's infrastructural growth in an overdrive, they are upbeat about
the future. Superior products and a strong Brand name, an extensive marketing and distribution network
and the technical know-how represent the Company's abiding strengths.

Management
Name Designation

Yadupati Singhania Chairman & Managing Director

K B Agarwal Director
Suparas Bhandari Director
Shyam Lal Bansal Director
Raj Kumar Lohia Director
Paul Heinz Hugentobler Director
Kailash Nath Khandelwal Director
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

THE FUND RAISING HISTORY


The company initially took the funds in 1994 by issuing 700 shares at RS 10 face value. Below is the fund
raised by company before getting listed in BSE IPO in 2005.

In 2005, embarking on a Rs 250 crore expansion plan, afoot to increase the production capacities of their
grey cement facility at Nimbahera and white cement plant at Gotan along with setting up captive thermal
power plants and heat recovery systems for which it come up with an initial public offer to raise funds to
the tune of Rs 300 crore.

JK Cement has already filed the red herring prospectus with SEBI for the issue, by book building process.
The company had hired DSP Merill Lynch as the merchant banker for the initial public offer.

JK Cement has finalized the issue price of its initial public offering (IPO) at Rs. 148 per share. The company,
a leading grey cement producer in Northern India, had entered the capital market with public issue of two
crore shares at a price band of Rs. 145 to Rs. 155. The issue was subscribed 1.80 times while the QIB
portion was subscribed 2.99 times. At the issue price of Rs. 148, the company mobilized Rs. 296 crore.
They issued 6300000 shares to public (Earning 93crore) and rest 13700000 to the preferred allotment
(earning 203 crore).

JK Cement Ltd Offer Details


Issue Open Date 21/02/2006
Issue Close Date 24/02/2006
Listing Date 14/03/2006
Face Value (Rs). 10.00
Offer Price/Range (Rs). 145.00 - 155.00
Issue Size (Retail) 6300000 Shares@148.00/share
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

JK Cement Ltd Listing Day Data


Open 160.00 Return On Offer Price Listing Price
Holding Period
High 163.00
Return 589.22% 537.53%
Close 156.00
Holding Period
Low 128.00
(Days) 4126 4108
Volume Rs. 544342974.00
Annual Returns 52.12% 47.76%

The share details are mentioned below before and after IPO. Before IPO the private issues were made by
the company from 1994 to 2005 but after 2005, company went public. Post issue large number of other
share holders invested in the company which increased the other share holding from 14 % to 38%. This
infer that the company had good reputation in the market and many of the people wanted to invest in the
company.
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

Most importantly company has focused in providing shares to different share holders so that major part of
decision power remains in hand of the founders of the company, Singhania and Yadu International.
Company did not take loans from the banks as they had sufficient funds for their operations.

DEBT PROFILE
The company has raised Debt in the form of Non-Convertible Debentures and loans from banks. Below
given is the bifurcation along with its allocation.

2016 2015
Debt
Amount(In Lakhs)
Non-Convertible
66500 54700
Long Term Debentures
Borrowings Term Loans From Banks 154367.32 153971.63
Vehicle Loan 146.78 188.79
Short Term
Loan from Banks 19620.69 26335.28
Borrowings

1. Non-Convertible Debentures

The proceeds from the NCD issue were utilized towards long term working capital requirements and
general corporate purposes of the company. It increased its grey cement capacity to 7.50 MnTPA from
4.50 MnTPA.

Term Loans from Banks

1. Loans Related to Cement Plant at Rajasthan


Source Amount(In Lakhs)
Canara Bank 3575.85
EXIM Bank 5000
Other Banks 18337.46
The company raised major loans from banks to invest and expand in its cement plant at Rajasthan.

2. Loans Related to Cement Plants at Karnataka in 2009


Source Amount(In Lakhs)
Indian Bank 930.45
Consortium Of Banks 8436.78
State Bank Of India 4360.73
Allahabad Bank 2421.84
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

The company took loans from Banks to fund its working capital requirements on inventories and
other current assets for its Cement and Thermal Power Plant at Karnataka.

3. Loans related to new cement plants at Rajasthan and Haryana


Source Amount(In Lakhs)
Consortium of Banks 119803.64

The company raised loan from the consortium of banks to setup new cement plant at Mangrol,
Rajasthan and split grinding unit at Jharli, Haryana. It purchased fixed assets for the plants and
second charge on current assets.

4. Loan related to Putty plant at Katni, Madhya Pradesh


The company took loan of Rs 3800 lacs for purchasing fixed assets related to the wall putty project
at Katni, Madhya Pradesh.

5. Loan for Properties


The company took loan of Rs 1422.32 lacs for purchase of properties such as office, guest house
land for further expansion.

6. Loan related to Cement Plant at Fujairah


The company took loan of Rs 62555.15 lacs against 51% shareholding in J.K Cement works(
Fujairah) for increasing the capacity of the plant.

Peculiar Features

Forecasting the future demand of the cement the company commissioned two new plants in
Rajasthan and Haryana. The company funded it through long term loans from banks thus increasing its
long term borrowings.

Analysis

The company wants to capture the growing demand of the industry through increased capacities and
improved operations. For this the company is raising debt to meet its funding requirements.

Debt Profile As at 31-03-2016 As at 31-03-2015


Long Term Borrowings 230787.66 215879.73
Other Long Term Liabilities 13964.53 11676.87
Short term Borrowings 19620.69 26335.28
Other Current Liabilities 64577.25 58920.35
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

250000

200000

150000
2016
2015
100000

50000

0
Long Term Other Long Term Short term Other Current
Borrowings Liabilities Borrowings Liabilities

EQUITY PROFILE
In 2005 The Company was listed on the BSE and the Company allotted 7,426,950 Equity Shares to the
shareholders of JKSL pursuant to the AAIFR order dated January 23, 2003.

The shareholding by different stake holders in the company has remained the same since its IPO. The
company has authorized capital of 80 crore but they have just taken 69.93 crore from equity.

As the company has set up new plant of wall putty at Katni and increased the production capacity of the
grey cement and white cement in Rajasthan and Haryana, the company needs funds for working capital
and to bear the operating cost. Also JK has come up with the new product PRIMAX which also needs
reasonable budget for promotional activities.

In the annual meeting, company gave a proposal to raise funds by issue of equity shares and/or such other
securities, as may be permitted, by way of a public or private offering, including a qualified institutions
placement or any combination, or any other method as may be permitted under applicable law. This
requires the approval of the shareholders of the Company.

Company is planning for the debt of 50 crore of these future plans and the remaining required amount will
be taken from of equity.

The paid up Equity Share Capital as on 31st March, 2016 remained at Rs, 69.93 Crore. During the period
under report, Company has not issued any share including Sweat Equity, ESOP and/or convertible
debentures.
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

VALUATION
Price Earnings Ratio

The Price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current
share price relative to its per-share earnings.

Analysis
1. The low P/E ratio till 2014 indicates that the company was performing badly in terms of its EPS.
The investment climate of the company was not favorable and investors were not willing in the
company.
2. For its expansion across North India the company had to raise debts as it couldnt get investors
because of low P/E Ratio.
3. In 2015 and 2016 the market price of the shares of the company increased thereby increasing Its
EPS. Its represents a good financial condition of the company thereby investors will now be willing
to invest in the company.
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

Total Asset Turnover Ratio

The total asset turnover ratio is a general efficiency ratio that measures how efficiently a company
uses all of its assets. This gives investors and creditors an idea of how a company is managed and
uses its assets to produce products and sales.

Analysis

1. In 2012 & 2013 high turnover ratio indicated that the company was able to generate higher
revenues from its investment in assets.
2. The ratio defined significantly by almost 20% in 2014 indicating that the company didnt utilize
its assets efficiently.ie. Underutilization of assets.
3. Owing to the growing demand company increased its ratio by 10% thus efficiently utilizing its
assets.

Interpretation

The company was efficiently utilizing its assets in 2012-13 but due to slump in demand its
efficiency decreased. It is again on a growth trajectory due to increased demand and will further
improve as the market grows overall.

P/B Ratio

The price-to-book ratio measures a company's market price in relation to its book value. The ratio
denote how much equity investors are paying for each dollar in net assets.
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

Analysis

1. In 2012 the stock of the company was undervalued i.e the market price of the stock was less in
relation to the assets of the company.
2. In 2013-14 the stock of the company got overvalued i.e indicating excess market price of the
company over assets.

CURRENT RATIO
It measures the ability of a business to repay current liabilities with current assets. Current assets
are assets that are expected to be converted to cash within normal operating cycle, or one year.
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

1. As the current ratio is greater than 1, means that current assets are more than current liabilities
and the company should not face any liquidity problem, and will be yielding high return with
profitability.
2. JK CEMENT ability to recover its current liabilities with its current assets has increased from 1.22 to
1.29 This means the ability to pay its liabilities via its current assets have increased. Efficiency and
liquidity has increased.
3. JK Cement successfully commenced commercial dispatches from its
white cement based Wall Putty manufacturing plant at J.K.White, Katni
in M.P. in 2016 leading to increase in current ratio.

Debt/Equity Ratio

Debt/Equity Ratio
1.46 1.47 1.42
1.5
0.78 0.84
1
Debt/Equity Ratio
0.5

0
2016 2015 2014 2013 2012

Analysis

Company had more equity in 2012 and 2013 as compared to debt but in 2014 company took more
debt from banks for setting up plant in the Rajasthan and Haryana.

SHAREHOLDING PATTERN

Description Percent of Share (%)


Promoters 66.57
Individuals 9.83
Institutions 7.34
FII 11.94
Govt. 0
Others 4.32
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

4.32
11.94 Promoters
7.34
Individuals
9.83
Institutions
66.57
FII

Govt.

Others

Analysis

The major shareholding of the company lies with the promoters as company wants to keep the decision
power with themselves. Remaining shares are with various other institutions, individual etc

GROWTH STRATEGY
Strategic Decisions taken by Co.

1. Increase the authorized capital to borrow loans from the limit 5000cr to 7000cr for miscellaneous
and capital expenditure schemes.
2. Commissioned brownfield units at Mangrol, Rajasthan and split grinding unit at Jharli, Haryana
taking its capacity milestone to 10 MnTPA.
3. Introduced a new multipurpose White cement based Wall Dressing, Primaxx which can be used for
both exteriors and interiors thus bringing disruption in the market.

Sector Overview

1. The industry was in a downturn for last few years thus making JK cement to operate at 67%
utilization only.
2. The growth rate of consumption was dismal low at 5-6%.
3. The sector bounced back within 2015-16 with renewed focus of govt. on the Infrastructure sector
taking the capacity utilization rate of co. at 70%.
4. The demand stood at 284 MnTPA as against the supply of 384MnTPA thus making the sector
operate at 73% capacity utilization.
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

Operational Strategy (Way Ahead)

1. The company is gearing up to increase its capacity expansion with new plant additions which will
help it to improve its efficiencies.
2. JK is planning to come up with new products and has started using blended cement, alternate raw
material and fuel to improve its energy efficiency.

Analysis

The cement industry growth is directly dependent on infrastructure sector. With the increased
government efforts to propel the infrastructure sector with higher spends on roads and highways the
sector is showing signs of revival. The company is adopting the right strategy in expanding its capacity as
the infra sector is going to boom within few years. This will lead to boom in cement industry thus making it
ready to meet the future demands. Though it entails raising debts initially but with increased volumes and
profits debts can be paid off.

RISK AND RETURN

What kind of risk do you assess for this company and why: financial and operating risk? Compute its beta.
Compute its average return. Do you think that the return justifies the risk on the same?
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

OPERATIONAL

Industry Risk
At present, the countrys cement capacity is 384 MnTPA. In FY 2015-16 cement demands has increased
from 276 MnTPA to 284 MnTPA, thereby registering growth of 3% only, if this rate of growth continues in
FY 2016-17 then the gap between demand and supply will increase thereby putting pressure on margins.
Another risk, which industry is facing is the consolidation of cement capacity in the hands few large
players. This will allow them to run the market on their own whims and putting mid-size player at back
end.

Infrastructure Risk
Infrastructure sector propels overall development of the economy. Any pull back by Government initiative
on Make in India campaign or Swachh Bharat Abhiyan will result in de-growth of cement industry. In
particular, the discharge or emission of chemicals, dust or other pollutants into the air, soil or water that
exceed permitted levels and cause damage to others may give rise to liabilities to the Government of India
and State Governments and third parties, and may result in our incurring costs to remedy such discharge
or emissions, such as from the use of coal.

Raw Material Risk


The basic raw material for Portland cement is limestone. The existing miners will have to pay 30% of the
royalty as contribution towards the proposed district mineral foundations (DMFs), which is meant to
support project-affected people, while those who would get mines through the auction route now would
have to pay just 10% of royalty.
Besides, with changes in Mines & Mineral (Development and Regulation) Amendment Act, 2015, any lease
granted before the commencement of the Act, for captive use is extended up to the period ending on Mar
31, 2030 or till completion of their renewal period, whichever is later. The MMDR Act also allows transfer
of captive mining lease not granted through auction. This will open door for deals, which are pending for
acquisition. From now onwards, all mining lease will be granted by the process of auction/bidding. The act
also gives the right of first refusal to the existing leaseholder at the time of auction by placing the highest
bid for mines used for captive purpose. This will increase the cost of basic raw material for existing players.

Fuel Risk
Cement industry is dependent upon linkage coal for fulfilling its fuel requirement. Some Plants are also
using pet coke as replacement of coal. Coal is also used by the industry for captive power generation.
However, the price of coal and pet coke is highly volatile and is more or less dependent on international
crude price. The major cost for cement production is power and fuel cost. Any increase in coal prices may
have adverse impact on cost. Further, levy of clean energy cess of 200 per tonne on coal/lignite in budget
of 2016-17 will increase power and fuel cost.

Logistic Risk
Efficient and effective utilization of logistics results in managing both input and output resources
prudently. With aggressive competition in market to reach end user, more and more cement players are
targeting grinding units close to consumption location. Logistics play an important role in reducing cost
and improving margin. However, due to less availability of rakes from railways, the only alternative left is
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

dependence on road transport. Therefore, any increase in diesel cost may have adverse impact on logistic
cost.

Financial Risk

Taxes
High taxes remain a major concern for cement industry. Though steel enjoys special privileges of being
levied at lower rate, on the other cement is taxed at higher rate making it dearer than other raw material
needed for infrastructure and real estate sector. This problem can be overcome by introduction of uniform
tax regime under Goods & Service Tax. The government is taking keen interest in getting cabinet approval
on GST act and to get it passed by both the houses of the parliament.
Any adverse changes in any of the taxes levied by the central or state governments may adversely affect
our competitive position and profitability.

Interest Rate Fluctuations


Changes in interest rates could significantly affect the financial condition and results of operations. If the
interest rates for our existing or future borrowings increase significantly, our cost of servicing such debt
will increase. This may adversely impact the results of operations, planned capital expenditures and cash
flows.

Currency Exchange Rate Fluctuations


Changes in currency exchange rates influence the results of operations. They import small quantities of
coal, packing material and stores and spares for the operations and future capital expenditures, including
any imported equipment and machinery, may be denominated in currencies other than Indian rupees.

Economic Risk
Cement industry is dependent on macro-economic condition of the country. Government initiatives largely
impact this industrys growth. Due to the slowdown in economic or infrastructure development activities,
cement demand may get adversely affected, thereby putting a pressure on the selling price of cement

ANALYSIS OF BETA

Beta is a measure of a stock's volatility in relation to the market. By definition, the market has a beta of
1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that
swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the
stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but provide a potential for higher
returns; low-beta stocks pose less risk but also lower returns.

In order to calculate beta, we took the values of Nifty 50 indices and JK Cement stock of last 10 years in
order to analyze the current risk associated with JK Cement. Also, for risk free return, we took the rate of
10Y security bond issued by Indian government.
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

Monthly Stock Retur Index Retur Monthly Stock Retur Index Return
Closing Price ns Value ns Closing Price ns Value s
9/30/2007 154.24 5900.65 1/31/2013 304.33 -0.01 5693.05 -0.06
10/31/2007 194.85 0.26 5762.75 -0.02 2/28/2013 254.05 -0.17 5682.55 0.00
11/30/2007 177.21 -0.09 6138.60 0.07 3/31/2013 251.56 -0.01 5930.20 0.04
12/31/2007 139.47 -0.21 5137.45 -0.16 4/30/2013 225.63 -0.10 5985.95 0.01
1/31/2008 135.37 -0.03 5223.50 0.02 5/31/2013 218.55 -0.03 5842.20 -0.02
2/29/2008 134.55 -0.01 4734.50 -0.09 6/30/2013 173.62 -0.21 5742.00 -0.02
3/31/2008 124.42 -0.08 5165.90 0.09 7/31/2013 175.19 0.01 5471.80 -0.05
4/30/2008 115.76 -0.07 4870.10 -0.06 8/31/2013 184.85 0.06 5735.30 0.05
5/31/2008 107.93 -0.07 4040.55 -0.17 9/30/2013 190.57 0.03 6299.15 0.10
6/30/2008 100.58 -0.07 4332.95 0.07 10/31/2013 190.22 0.00 6176.10 -0.02
7/31/2008 110.84 0.10 4360.00 0.01 11/30/2013 190.42 0.00 6304.00 0.02
8/31/2008 89.98 -0.19 3921.20 -0.10 12/31/2013 166.12 -0.13 6089.50 -0.03
9/30/2008 46.93 -0.48 2885.60 -0.26 1/31/2014 166.03 0.00 6276.95 0.03
10/31/2008 37.55 -0.20 2755.10 -0.05 2/28/2014 236.55 0.42 6704.20 0.07
11/30/2008 36.69 -0.02 2959.15 0.07 3/31/2014 223.78 -0.05 6696.40 0.00
12/31/2008 33.96 -0.07 2874.80 -0.03 4/30/2014 328.85 0.47 7229.95 0.08
1/31/2009 30.51 -0.10 2763.65 -0.04 5/31/2014 381.33 0.16 7611.35 0.05
2/28/2009 33.88 0.11 3020.95 0.09 6/30/2014 384.39 0.01 7721.30 0.01
3/31/2009 50.26 0.48 3473.95 0.15 7/31/2014 466.86 0.21 7954.35 0.03
4/30/2009 75.60 0.50 4448.95 0.28 8/31/2014 552.79 0.18 7964.80 0.00
5/31/2009 84.52 0.12 4291.10 -0.04 9/30/2014 600.23 0.09 8322.20 0.04
6/30/2009 102.82 0.22 4636.45 0.08 10/31/2014 615.63 0.03 8588.25 0.03
7/31/2009 105.16 0.02 4662.10 0.01 11/30/2014 634.55 0.03 8282.70 -0.04
8/31/2009 120.01 0.14 5083.95 0.09 12/31/2014 692.47 0.09 8808.90 0.06
9/30/2009 104.01 -0.13 4711.70 -0.07 1/31/2015 703.80 0.02 8844.60 0.00
10/31/2009 119.09 0.14 5032.70 0.07 2/28/2015 661.72 -0.06 8491.00 -0.04
11/30/2009 133.02 0.12 5201.05 0.03 3/31/2015 641.26 -0.03 8181.50 -0.04
12/31/2009 146.50 0.10 4882.05 -0.06 4/30/2015 634.65 -0.01 8433.65 0.03
1/31/2010 156.25 0.07 4922.30 0.01 5/31/2015 669.97 0.06 8368.50 -0.01
2/28/2010 161.51 0.03 5249.10 0.07 6/30/2015 678.07 0.01 8532.85 0.02
3/31/2010 167.67 0.04 5278.00 0.01 7/31/2015 624.00 -0.08 7948.95 -0.07
4/30/2010 164.25 -0.02 5086.30 -0.04 8/31/2015 653.35 0.05 7948.90 0.00
5/31/2010 168.34 0.02 5312.50 0.04 9/30/2015 685.45 0.05 8065.80 0.01
6/30/2010 151.44 -0.10 5367.60 0.01 10/31/2015 690.90 0.01 7935.25 -0.02
7/31/2010 149.82 -0.01 5402.40 0.01 11/30/2015 577.05 -0.16 7946.35 0.00
8/31/2010 156.46 0.04 6029.95 0.12 12/31/2015 509.90 -0.12 7436.15 -0.06
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

9/30/2010 159.17 0.02 6017.70 0.00 1/31/2016 478.35 -0.06 6987.05 -0.06
10/31/2010 147.25 -0.07 5862.70 -0.03 2/29/2016 675.50 0.41 7738.40 0.11
11/30/2010 133.51 -0.09 6134.50 0.05 3/31/2016 593.25 -0.12 7849.80 0.01
12/31/2010 114.63 -0.14 5505.90 -0.10 4/30/2016 582.05 -0.02 8160.10 0.04
1/31/2011 123.02 0.07 5333.25 -0.03 5/31/2016 666.25 0.14 8287.75 0.02
2/28/2011 129.20 0.05 5833.75 0.09 6/30/2016 713.35 0.07 8638.50 0.04
3/31/2011 116.28 -0.10 5749.50 -0.01 7/31/2016 796.05 0.12 8786.20 0.02
4/30/2011 104.83 -0.10 5473.10 -0.05 8/31/2016 875.75 0.10 8611.15 -0.02
5/31/2011 99.28 -0.05 5647.40 0.03 9/30/2016 945.35 0.08 8638.00 0.00
6/30/2011 97.73 -0.02 5482.00 -0.03 10/31/2016 727.15 -0.23 8224.50 -0.05
7/31/2011 99.70 0.02 5001.00 -0.09 11/30/2016 719.85 -0.01 8185.80 0.00
8/31/2011 106.89 0.07 4943.25 -0.01 12/31/2016 722.90 0.00 8561.30 0.05
9/30/2011 101.52 -0.05 5326.60 0.08 1/31/2017 886.00 0.23 8879.60 0.04
10/31/2011 96.80 -0.05 4832.05 -0.09 2/28/2017 934.95 0.06 9173.75 0.03
11/30/2011 94.37 -0.03 4624.30 -0.04 3/31/2017 974.75 0.04 9304.05 0.01
12/31/2011 105.86 0.12 5199.25 0.12 4/30/2017 1109.80 0.14 9621.25 0.03
1/31/2012 129.64 0.22 5385.20 0.04 5/31/2017 1023.25 -0.08 9606.90 0.00
2/29/2012 150.67 0.16 5295.55 -0.02
3/31/2012 128.34 -0.15 5248.15 -0.01
4/30/2012 136.56 0.06 4924.25 -0.06
5/31/2012 150.20 0.10 5278.90 0.07
6/30/2012 199.07 0.33 5229.00 -0.01
7/31/2012 193.62 -0.03 5258.50 0.01
8/31/2012 241.18 0.25 5703.30 0.08
9/30/2012 241.18 0.00 5619.70 -0.01
10/31/2012 285.19 0.18 5879.85 0.05
11/30/2012 344.81 0.21 5905.10 0.00
12/31/2012 306.44 -0.11 6034.75 0.02
June 16, 2017 [ RESEARCH PROJECT - JK CEMENT LTD]

0.4

0.3

0.2

0.1
Stock Price
Returns
0
-0.6 -0.4 -0.2 0 0.2 0.4 0.6
-0.1

-0.2

-0.3
Index Value Returns

Parameters Stock Index

Average Return Monthly 2.71% 0.64%

Average Annual Return 32.53% 7.72%


Standard Deviation (Risk
of stock) 14.98% 6.66%
Correlation (of stock with
market) 0.62

Beta by slope 1.39

Covariance/Variance 0.006109484 0.004430281

Beta by Regression 1.391020142


Stock Required Return Rs = Rf + beta
(CAPM), monthly (Rm- Rf) 3.57%

NOTE:Risk free return =0.5%

Here, we can see that the beta of JK Cement, with respect to NSE 50, is 1.39, which is greater than 1. This
shows that JK Cement stock is high risky than total market but it also has High Returns i.e. of 3.57%.
However, expected returns of JK Cement are higher than recent past market returns.

Its a constant performing company having high risk and with high returns.