JK Cement slips 9% on board nod for Rs 600 cr investments in paint venture
Published On: Monday, March 7, 2022 | By: Team KnowMyStock
Shares of JK Cement Ltd. logged the worst day in 14 years, slipped 9 percent to Rs 2,395, also its fresh 52-week low, on the BSE in Monday’s intra-day trade as analysts raised concerns about the company's "aggressive" investment plan to enter the paints business. The company said its board approved an investment of Rs 600 crore into the painting venture, which will be infused over a five-year period.“The subsidiary would undertake manufacturing, selling, trading, importing and exporting and otherwise dealing in all types of paints and allied products and services,” the company said in a stock exchange filing. Consumer preference for existing brands and infrequent purchase cycle could also make it difficult for JK Cement to gain share in the mid-to-premium emulsions business, they said.
Analysts at ICICI Securities Ltd note that there is a probability of minor Ebitda loss in the initial years in the paints business, hence there could be an overall RoCE-dilutive impact. Ebitda is short for earnings before interest, tax, depreciation and amortization. RoCE stands for return on capital employed.
With this new entry, India's paint manufacturing landscape is set to become another battle zone for the country's corporate biggies. In the last two years, Aditya Birla Group company Grasim Industries a
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