India Cements advances 13% on heavy volumes; stock hits 34-month high

A combined 14.4 million shares, representing nearly 5 per cent of the total equity of India Cements, had changed hands on the NSE and BSE till 01:55 pm

Shares of India Cements zoomed 13 per cent, hitting 34-month high of Rs 163.80 on the BSE on Wednesday on the back of heavy volumes in an otherwise range-bound market. The stock of the cement manufacturer surpassed its previous high of Rs 164, hit on November 26, 2020. It was trading at its highest level since February 2018.

At 01:55 pm, India Cements was quoting at Rs 163, up 12 per cent, as compared to a marginal 0.04 per cent rise in the S&P BSE Sensex at 47,620 points. The trading volumes on the counter rose more than 10-fold today. A combined 14.4 million shares, representing nearly 5 per cent of the total equity of India Cements, changed hands on the NSE and BSE so far.

Radhakishan Damani, the retail tycoon, and his family hold about 20.4 per cent stake in India Cements as of September 30, 2020, the shareholding pattern data shows.

In the past month, the stock has underperformed the market and declined 8 per cent after the company reported 18.6 per cent year on year declined in overall volume of clinker and cement at 21.07 lakh tons in July-September quarter (Q2FY21). In comparison, the S&P BSE Sensex rallied 7 per cent during the same period, till Tuesday.

The management said a sluggish performance by the cement industry in the last quarter of last year was further damaged by Covid from March onwards. It is only in South India with a substantial capacity overhang; recovery is likely to be slow. The capacity utilisation in South was much lower than other regions and there is a faint possibility given the reduction of Covid activity that utilisation levels can improve, the company said while announcing Q2FY21 results on November 6, 2020.

There are also reports of pick up in house building and construction activity in semi urban and urban centres aided by the rebound, work from home concept and return of migrant labour. This along with an expected fresh stimulus measure from the Government with focus on increased public spending on irrigation, road building and other projects is expected to improve the cement demand, it said.