Buy KCP; target of Rs 105: LKP

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26 Aug, 2025 12:21

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LKP's research report on KCPKCP is a 74 year old diversified business group with a turnover of ₹6.2 bn on as per its standalone financials of FY15. Founded as a co-operative sugar plant in 1941, the company now has interests in: Cement, Heavy Engineering, Sugar, Power, Hospitality, Building Materials.As a group, the company has over 9 manufacturing locations in India and Vietnam and has set up over 40 sugar factories and 12 cement factories in India and overseas. It has a subsidiary in Vietnam where it is a player in their domestic sugar industry with a current capacity of 6,000 tcd. The sugar manufacturing capacity is expanding to 8,000 tcd in FY16E and 10,000 tcd in FY17E.  It has also partnered with Fives Group (France) through a joint venture to execute turnkey sugar plants. On a standalone basis, the main revenue stream for the company is its cement business who’s contribution to the top-line has gone up from ~50% to ~85% in FY10-15 and to the bottom-line from ~35% to ~83% of its profitable businesses in FY10-15. It has 2 cement plants with a combined capacity of 2.3 million tons in Muktyala, AP and Macherla, AP.KCP is a diversified business group, with business interests in cement, heavy engineering, power, sugar, hospitality and building materials. It earns 85% of its top-line from cement business where it is a regional player in Andhra Pradesh with a 2.3 mn ton capacity in its 2 plants in Macherla, AP and Muktyala, AP. It has a heavy engineering division with 2 heavy manufacturing facilities having a 4,500 MT foundry and 6,000 MT fabrication capabilities in Tamil Nadu. It is also a player in the Vietnam sugar industry with a capacity of 6,000 tcd, expanding to 8,000 tcd in FY16E and 10,000 tcd in FY17E.At 2.3x EV/EBITDA on current fiscal earnings, KCP trading multiples are attractive for an investor and we recommend a BUY with a one year price objective of ₹105. (3.5xEV/EBITDA)For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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