Near-term gains unlikely for cement stocks due to high valuations

The muted cement demand has continued even in June on the back of fewer government projects and labour and water shortage in a few states/regions, said analysts

A recovery in prices in the past couple of months has provided strong support to cement stocks. The share prices of select cement companies have gained 12-34 per cent in 2019 so far, outpacing an 8 per cent rise in the Sensex. 

However, concerns over realisations and high valuations could limit gains in the near term. Channel checks by some research firms indicate that the pan-Indian average cement prices have fallen 1-2 per cent month-on-month in June. According to a CLSA report, higher price discounts and rebates were observed in mid-May amid weaker demand. This could partly offset realisation benefits in