Guj Ambuja Scrip Heads Northward

The Gujarat Ambuja Cement scrip moved upwards during the week, both at the Bombay Stock Exchange (BSE) and at the National Stock Exchange (NSE). The announcement of a hike in petroleum prices did not effect the scrip in spite of the hike likely to have a cascading effect on the cement sector.

Over a period of seven days, the Gujarat Ambuja stock rose between 8 to 9 per cent at the BSE and the NSE respectively. The scrip closed on Friday, August 29 at Rs 304 at the BSE while at the NSE the scrip closed at Rs 305. From Monday, September 1, the scrip has been steadily increasing upwards at both the exchanges and witnessing huge volumes.

On Tuesday, the day the petroleum price hike was announced, the scrip moved up by Re 1 to close at Rs 314 at the BSE with 76,100 shares traded. At the NSE, the scrip increased by Rs 3 to close at Rs 313 with 4 lakh shares changing hands.

The stock spurted on Wednesday by Rs 8 to close at Rs 322 with 4.76 lakh shares traded. At the NSE the scrip moved up by Rs 9 to close at Rs 324.

On Thursday, the scrip again zoomed by Rs 7 to close at Rs 329 with 4.76 lakh shares changing hands at the BSE and at the NSE it closed at Rs 328 with 6.47 lakh shares being traded.

Friday saw 2.17 lakh shares being traded at Rs 328 at the BSE, while at the NSE the scrip closed at Rs 331 with trading witnessed in 4.71 lakh shares.

No doubt Gujarat Ambuja Cement will be affected due to the petroleum price hike but it has an advantage over other companies. The advantage is that part of its cement plants are located near the port besides, it also has its own vessels which will help the company in saving costs on transportation. However, the low offtake will prevent the company from increasing its profitability in a big way, said Prassana Maral, a research analyst at Mafatlal Securities.

Gujarat Ambuja has also taken over the ailing Modi Cement plant. This is expected to enhance the companys capacity. On an equity of Rs 73.52 crore, it posted a net profit of Rs 134 crore for the year ended June 1997.

The scrip is unlikely to move up sharply in the near future as the price has already risen during the last few trading sessions, the analyst said.