India's J K Cement falls 12% after co forays into paint business

J K Cement

07/03/2022 08:19

** Shares of the cement maker  JKCE.NS  fall as much as 12%
to 2,324.05 rupees, the biggest pct loss since March 2020, in a
significantly weak Mumbai market
    ** Co said on Saturday it was foraying into paint business
via unit with an investment of 6 billion rupees ($78.02 million)
over next five years (https://bit.ly/35yIjn3)
    ** Entry into paints may raise capital allocation concerns
given the many entry barriers, heightened competition and
probability of minor EBITDA loss in the initial years, ICICI
Securities said in a note 
    ** The size of the highly profitable paint industry stands
at 600 bln rupees, Emkay Global analysts said in a note
    ** JKCE's move comes amid a surge in crude prices, a key raw
material for making paints and with other paint makers
struggling with higher input costs and lower margins 
    ** Brent crude soared near $130 a barrel on Monday, its
highest since 2008, as the United States and European allies
mull a Russian oil import ban 
    ** Paint maker Asian Paints  ASPN.NS  is down 21.2%, while
Berge Paints  BRGR.NS  has fallen 17.8% YTD vs 66% surge in
crude prices
    ** Indian shares tumbled over 2% on Monday 

($1 = 76.9000 Indian rupees)

 (Reporting by Nallur Sethuraman in Bengaluru)
 ((Sethuraman.NR@thomsonreuters.com; (+91 8061822737); Reuters
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))