Cement shares surge on hopes of strong volume growth after elections

Deccan Cements, Orient Cement, Grasim Industries, UltraTech Cement, JK Lakshmi Cement and JK Cement were up between 5 per cent and 13 per cent on the BSE on Thursday.

Shares of cement companies surged by up to 13 per cent on the BSE in intra-day trade on Thursday on the expectation of strong volume growth as infrastructural spending and demand in Housing-For-All scheme are set to gain momentum post elections.

Deccan Cements, Orient Cement, Grasim Industries, UltraTech Cement, JK Lakshmi Cement and JK Cement were up between 5 per cent and 13 per cent. India Cements, Sagar Cements, Saurashtra Cement, ACC, Shree Cement, Star Cement and Ambuja Cements were up in the range of 2-4 per cent. In comparison, the benchmark S&P BSE Sensex was up 0.36 per cent at 39,195 points at 12:09 pm.

Ultratech Cement hit an all-time high of Rs 4,686, up 7 per cent, surging 12 per cent from Wednesday low of Rs 4,183 after the company has posted strong set of numbers for the quarter ended March 2019 (Q4FY19). The company has posted around 15 per cent year on year growth in volumes primarily led by the strong demand in affordable housing projects. The growth is mainly led by the strong demand witnessed in rural housing and low income housing scheme like Pradhan Mantri Awaas Yojana.

According to Aditya Gupta, research analyst at Narnolia Financial Advisors, this demand is likely to increase further on the back of government’s continuous effort to improve farm income by increasing minimum support price (MSP) of major crops which is likely to benefit farmers mainly in the states like Uttar Pardesh, Madhya Pradesh and Gujarat.

The Met department predicted a ‘near normal’ monsoon for this year which will act as a catalyst to the cement demand. Going forward, general elections may impact some demand in the beginning of financial year but post elections, demand is likely to rebound which gives us strong volume growth visibility to the tune of 8-10% for the rest of the year, the brokerage firm said in result update.

“Although we expect near-term moderation in demand due to the start of the General Elections, continuance of healthy demand is expected for the industry over the long term. FY20 has started on a positive note with sharp price hikes taken by firms across regions, and we expect rising utilization levels to help companies sustain these price hikes,” analysts at Elara Capital said in cement sector quarterly preview.

COMPANY	LATEST	PREV CLOSE	GAIN(%)
DECCAN CEMENTS	430.00	391.00	9.97
ORIENT CEMENT	101.00	93.55	7.96
SAURASHTRA CEM.	49.95	47.20	5.83
ULTRATECH CEM.	4647.00	4396.45	5.70
MANGALAM CEMENT	282.00	267.05	5.60
JK LAKSHMI CEM.	373.40	353.60	5.60
INDIA CEMENTS	110.50	105.70	4.54
J K CEMENTS	911.00	872.65	4.39
THE RAMCO CEMENT	801.70	772.15	3.83
UDAIPUR CEMENT	14.87	14.33	3.77
ACC	1651.05	1606.90	2.75
SAGAR CEMENTS	624.50	608.35	2.65
CENTURY TEXTILES	948.00	923.60	2.64
STAR CEMENT	109.00	106.25	2.59
NCL INDS.	144.95	141.30	2.58
PRISM JOHNSON	101.50	99.20	2.32
SHREE CEMENT	19894.50	19469.70	2.18
SANGHI INDS.	64.20	62.90	2.07
HEIDELBERG CEM.	184.75	182.30	1.34
AMBUJA CEM.	226.85	224.40	1.09