Cement shares in demand; ACC, Ambuja up 4%

UltraTech Cement,India Cements,J K Cement, Birla Corporation and Gujarat Sidhee Cement are up 2-5% on BSE.

Shares of cement makers are in demand and trading higher by up to 6% on the bourses on expectation of demand improvement along with an likely hike cement prices once monsoon season ends.

Orient Cement (up 6% at Rs 128), Heidelberg Cement India (up 5% at Rs 74), Udaipur Cement Works (5% at Rs 23), JK Lakshmi Cement (up 2% at Rs 320 and Ramco Cements (2% at Rs 337) have hit their respective record highs on BSE.

Among the frontline stocks - ACC and Ambuja Cements are up 4% each at Rs 1,561 and Rs 216 respectively on the BSE. UltraTech Cement is up 3% at Rs 2,722 followed by India Cements (3% at Rs 120), J K Cement (2% at Rs 482) and Birla Corporation (2% at Rs 542). Gujarat Sidhee Cement too locked in upper circuit of 5% at Rs 42.85 on BSE.

According to industry exporter, the cement demand is slated to grow at 7-8%, with the expected double digit growth in the second half of the current year.

After defying monsoon pressure during July, cement prices finally declined during August due to lower demand on account of the monsoon season. Average prices were reported at Rs 312/bag during August from Rs 323/bag in July.

“Overall, August 2014 witnessed demand pressure after registering an improvement in demand during Q1FY15 (with average YoY production growth of 9.67%) due to the monsoon season”, says Rashesh Shah and Darpan Thakkar, analysts at ICICI Securities.

In the midcap space, we like the business fundamentals of JK Cement (doubling white cement capacity),

JK Lakshmi Cement (strong presence in north) and Heidelberg (operating leverage and cost efficiency measures), analysts said.