Cement sector: If demand fails to pick up, stocks may come under pressure

Going ahead, raction in rural demand should continue in the back of good crop, normal monsoon, labour availability and government's welfare schemes

Stocks of major cement manufacturers, such as Shree Cement, UltraTech Cement, ACC, and Ambuja Cements have rebounded about 42 per cent since their March-April lows, as easing of the lockdown has helped demand recover and kept realisations firm. This, coupled with benign input prices, has augured well for profitability. However, sentiment could weaken again, if volumes fail to pick up.

After sales clocked in at just 15-20 per cent of normal in April because of the lockdown, they improved and were better-than-expected in May propped up by pent-up demand and decent traction in rural markets. In fact, construction in rural areas