JCT – WINNING ALL ALONG THE HEARTS OF QUALITY LOVERS

Company Name: JCT Ltd.

Sector: Textiles – Composite Mills.

Company Website: http://www.jct.co.in/

CMP: Rs.4.79 (As of today after the market close 20/03/2017)

The flagship company of the Thapar Group has a very long journey from 1946, a year ahead of our independence as cotton textile manufacturing company. Acquired the Benaras Cotton And Silk Mills in 1962, the list of mergers also include Shree Sadul Textiles (1978) and JCT Fibers Ltd. (1994).

Indigo Shirting /Bottom /Jacketing with Green Technology in 1942  is the most recent launch of JCT.

Fundamental Analysis

Currently trading at Rs. 4.79, JCT is driving the investors to worry about their investments, whose buy price is much higher than the current market price.  In the wake of their grief, I’m trying to present my view on JCT, one of my favorite Textile picks.

  • Company fundamentals are not so poor that it will erase our investment. What I mean to say currently the company financials are moderate.
  • And, at the same time looking at the fundamentals, nobody can say that awesome. There is a component of contingent liabilities of total Rs. 313. 74 Crores on the balance sheet, which the company has to cover in the coming quarters.
  • Current quick ratio of 0.55 is very poor, if the company doesn’t belong to the prestigious Thapar Group.
  • A P/B of 5.94 is is indicating that it’s trading much higher than its book value of around Rs. 0.84. Let it correct to a P/B of 4.7, which is its usual up move percentage.
  • Around 94% of Promoter Holding is pledged. Earnings include, Rs. 19.07 Crores as other income. Pledged share capital may have brought this component. They might have taken this step to reduce the interest burden. Might have made investments.

Technical Analysis

As a technical Analyst I believe that fundamentals will change according to the technicals. Looks, humorous! But, a perfect technical analyst knows its truth. Millions of such miracles happened and will.

According to technical Analysis, JCT will try to take its short push up in mid of April before the quarter results. But, will dip back to its previous low after the results. These ups and dips make a difference of less than a rupee. So, long-term investors as well as those who are stuck at higher price are better to keep them off the trading.

The real up move will start from the end of May / Middle of June. If that will not happen better to wait till July. Nobody can stop the rally. In-between short-term traders will enter and huge trade offs will take place. If you know the strategy, can make your money on the way. Otherwise, target for, Rs. 20 Plus.

Combing the company fundamentals and technicals, it’s easy to say that, the stock is bullish based on technical analysis. Technically bullish. We have to wait to see, the fundamentals will give their support by the time. The company may bag a big order. Textile stocks are like a monsoon, difficult to guess their rise and fall. Better to believe and follow technicals.

May this Popular Punjab Cotton bring the fortune to its investors in May

This is my perception and perceptive view on the JCT. If something goes disarray, from the current situation in the form of any unexpected loss to the company, I’m not responsible for your returns.

Strategy

If you are already in this scrip, add at Rs.4 levels, a few. Every investment should have the stop loss. So, have a stop loss at Rs 3.50 is best.

In the case, if anybody is impatient to wait for, shift to Binny Ltd. Which is available at much lower prices to its book value of around Rs. 165.

Don’t forget to leave your reply in the comment form below. Suggest and bring to my attention of my errors if done any! It may help me a lot, to further my stock analysis. You may also ask about your other stock picks in your portfolio. I’m happy to give all my possible suggestions.

All the best and Happy Investing!

 

 

Hameeda Ghori

Certified Financial Planner And Stock Analyst

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