Cement shares in focus; Ramco Cement, HeidelbergCement hit 52-week high

UltraTech Cement, ACC, Shree Cement, Ambuja, Century Textiles and HeidelbergCement were up 1%-8% on BSE.

Shares of cement manufacturers were trading higher on the bourses in an otherwise range bound market on expectation of strong show in the current quarter and volume recovery led by higher government spends on infra and revival in housing demand.

UltraTech Cement, ACC, Shree Cement, Ambuja Cements, Century Textiles, Ramco Cements, Deccan Cements, HeidelbergCement, Gujarat Sidhee Cement, India Cements, Birla Corporation, Sanghi Industries and J K Cements were up 1%-8% on the BSE.

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Ramco Cement (up 9% to Rs 443) and HeidelbergCement (6% at Rs 91) and Grasim Industries (2% at Rs 3,923) have touched their respective 52-week highs on the BSE in intra-day trade.

Religare Institutional Research expects EBITDA/t to improve for most cement companies quarter-on-quarter in January-March (Q4FY16) quarter.

“Overall, we believe earnings downgrades, particularly for large-caps, are nearing an end as volumes and pricing have turned favourable and cost benefits have begun to flow in”, the brokerage house said in a note.

International coal prices are down around 8% FY16TD in rupee terms and the decline in diesel (freight cost) would further cushion the cost for cement players, thus aiding profitability. Coal constitutes 20-25% of the production cost for cement.

Merger/acquisition deals like Jaiprakash Associates Ltd-UltraTech Cement and Birla Corp. -Reliance Infrastructure and Lafarge likely move out should lead to a buoyant pricing environment and higher EBITDA/t for cement players, added report.