UltraTech Cement, Grasim Ind hit 52-week low

UltraTech Cement was down 4% at Rs 1,569, while Grasim Industries by nearly 2% at Rs 2,268 on BSE.

Shares of UltraTech Cement and Grasim Industries have hit their respective 52-week low on the Bombay Stock Exchange (BSE).

UltraTech Cement was down 4% at Rs 1,569, after hitting low of Rs 1,566, while Grasim Industries was trading lower by nearly 2% at Rs 2,268, after touching low of Rs 2,264 on BSE. 

UltraTech Cement is a subsidiary of Grasim Industries, a flagship company of the Aditya Birla Group, which holds 60.3% stake in the company.

According to media reports UltraTech Cement will buy the Gujarat-based cement unit of Jaiprakash Associates (JP Associates).

“Manoj Gaur's JP Associates is expected to announce the sale of it's Gujarat-based cement unit to UltraTech in the next few days,” the Economic Times report suggests.

JP Associates could raise close to Rs 4000 crores by selling the 4.8 mt cement plant to the UltraTech Cement, added report.

Meanwhile, shares of UltraTech Cement has underperformed the market, by declining 15% after announcing Q1 earnings on July 29, as compared to 6.4% fall in benchmark S&P BSE Sensex.

The country’s biggest cement producer reported a 13.5% year-on-year fall in net profit for the quarter ended June 30, due to a slowdown in home building and infrastructure projects.

We are turning cautious on the cement sector due to the continued weakness in demand and prices (cement industry demand is nearly flat YoY so far in FY14 while the all India average prices are down >3% YoY for the fourth straight month), says analyst at Edelweiss Securities in a report dated July 29.

Given the high base of H1FY13, earnings will see a sharp decline on a YoY basis. With the recent downward revision to GDP estimates (we have revised down our FY14 GDP estimates from 6% to 5.6% and for FY15 from 7% to 6.5%), there is limited visibility of a sharp recovery post monsoons, added report.