Cement: Frontline stocks raise the bar

Cement stocks have outperformed the benchmark indices in the week ended February 6 on the back of a growth in despatches in January. The Business Standard Cement index appreciated by 4 per cent compared to a 1.3 per cent drop in the Bombay Stock Exchange’s Sensex last week.

The combined trading volume of 34 cement stocks increased by 52 per cent to 32.2 million shares last week from 21.2 million shares during the week ended January 30, 2009.

Frontline cement stocks of ACC, UltraTech Cement, Ambuja Cements and India Cements gained in the range of 1-6 per cent each, while mid-cap stocks such as Prism Cement, Mysore Cement, KCP, Mangalam Cement and Burnpur Cement appreciated in the range of 8-15 per cent each.

ACC has reported a 12.5 per cent rise in cement despatches at 1.89 million tonnes in January 2009 over the year-ago period.

The stock appreciated by 6.6 per cent last week and was the biggest gainer among frontline cement stocks. UltraTech Cement was up by 5.10 per cent at Rs 416.60 (Rs 396.40), while Ambuja Cements gained by 1.5 per cent at Rs 71.50 (Rs 70.45).

The 29 cement companies that have declared their financial numbers for the quarter ended December 2008 have posted a 12 per cent growth in sales, while net profit growth declined by 29 per cent on account of higher cost of production and lower price realisation.

Power and fuel costs, which increased by 48 per cent (the highest in the last five quarters), are still a major concern for the sector.