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Dalmia Cement: Still some steam left
S. Vaidya Nathan
EXPOSURES can be contemplated in the Dalmia Cement stock by investors with a penchant for high risk at the current price of Rs 210.
Business Line had recommended a buy at a price of Rs 160 in early June 2003. There is room for further gains, with the outlook for the cement business looking up. The company also has a presence in sugar, which accounts for 25 per cent of revenues. But cement is the key factor that drives the stock. With cement prices likely to prevail at higher levels as compared to 2002-03, a sizeable jump in earnings is likely.
The six-percentage-point improvement in operating profit margin in the latest quarter is a pointer. The Government's move to bear excess price for cane (over and above the minimum price fixed) paid to farmers could augment profitability. The scaling down of revenues from other loss-making businesses by 58 per cent may reduce the drag on the bottomline in FY 2004.
Note: Investors can take profits if the stock gains 20 to 30 per cent from the present levels, as a buy-and-hold approach may not pay.
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