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Building with Sh. Digvijay: A Solid Investment or Risky Mortar?


shree digvijay cement

Sh. Digvijay Cement India: A Cementing Opportunity or Crumbling Castle?

I. Overall Rating & Recommendation:

7/10 (Buy with Moderate Caution)

Recommendation: Sh. Digvijay Cement presents a decent long-term potential in the cement sector, but short-term headwinds necessitate a cautious approach. Consider buying for medium to long-term holding if comfortable with volatility, but wait for clearer signals of sustained profitability and market recovery before accumulating aggressively.

II. Company Analysis:

Sector: Cement

Market Cap (as of Jan 14, 2024): ₹1,571 Crore

Current CMP: ₹108

Products: Primarily manufactures and sells Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC).

Financials:

  • Steady revenue growth but profit margins under pressure due to rising input costs.

  • Debt-to-equity ratio moderate at 0.63.

  • P/E ratio attractive at 10.3, indicating potential undervaluation.

  • Future outlook hinges on cost control and potential market improvements.


III. Macroeconomic Factors:

  • Potential slowdown in the Indian economy impacting construction demand.

  • Rising energy costs squeezing margins for cement producers.

  • Government policies promoting infrastructure development offer long-term hope.

IV. Technical Analysis:

  • Daily chart trend analysis shows a sideways consolidation pattern with near-term volatility.

  • Breaking above ₹87 could signal a potential uptrend, while falling below ₹76 could lead to further downside.

V. Future Predictions:

  • CAGR of 10-15% achievable over the next 5 years with favorable market conditions and company execution.

  • Historical CAGR (past 5 years) for Sh. Digvijay and its index have been moderate, reflecting industry challenges.

VI. Ratios:

  • Debt-to-equity ratio: 0.63

  • Shareholder ratios: ROE: 18.2%, ROA: 7.9%

  • Sortino ratio: 0.7 (moderately downside sensitive)

  • PEG ratio: 0.68 (potentially undervalued)

  • Price-to-sales ratio: 1.36 (higher than industry average)

  • Beta: 1.1 (slightly more volatile than NIFTY)

VII. Conclusion:

Sh. Digvijay Cement offers promising long-term prospects but remains susceptible to near-term headwinds. Carefully assess the economic outlook, company performance, and technical indicators before investing.


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