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JK Lakshmi Cement Limited's (NSE:JKLAKSHMI) P/E Is On The Mark

Simply Wall St · 06/28 02:21

With a price-to-earnings (or "P/E") ratio of 34.9x JK Lakshmi Cement Limited (NSE:JKLAKSHMI) may be sending bearish signals at the moment, given that almost half of all companies in India have P/E ratios under 29x and even P/E's lower than 16x are not unusual. However, the P/E might be high for a reason and it requires further investigation to determine if it's justified.

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JK Lakshmi Cement could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. One possibility is that the P/E is high because investors think this poor earnings performance will turn the corner. If not, then existing shareholders may be extremely nervous about the viability of the share price.

See our latest analysis for JK Lakshmi Cement

pe-multiple-vs-industry
NSEI:JKLAKSHMI Price to Earnings Ratio vs Industry June 28th 2025
Keen to find out how analysts think JK Lakshmi Cement's future stacks up against the industry? In that case, our free report is a great place to start.

Is There Enough Growth For JK Lakshmi Cement?

In order to justify its P/E ratio, JK Lakshmi Cement would need to produce impressive growth in excess of the market.

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 37%. This means it has also seen a slide in earnings over the longer-term as EPS is down 35% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

Turning to the outlook, the next three years should generate growth of 37% per year as estimated by the analysts watching the company. That's shaping up to be materially higher than the 22% each year growth forecast for the broader market.

In light of this, it's understandable that JK Lakshmi Cement's P/E sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Final Word

While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.

We've established that JK Lakshmi Cement maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.

It is also worth noting that we have found 3 warning signs for JK Lakshmi Cement that you need to take into consideration.

If you're unsure about the strength of JK Lakshmi Cement's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.