Among individual stocks, JK Cement rallied 9 per cent to Rs 2,382, also its 52-week high on the BSE. UltraTech Cement hit a new high of Rs 5,512 after rising 1 per cent today. The stock has gained 3 per cent in the past two trading days. Birla Corporation, JK Lakshmi Cement, Ramco Cements, and India Cements were up between 4 per cent and 8 per cent on the BSE.
In the past one week, most of the frontline cement stocks have outperformed the market and risen more than 4 per cent, as compared to 1.2 per cent rise in the benchmark S&P BSE Sensex.
Motilal Oswal Securities expects the cement industry volumes to remain strong on the back of rural housing and a pickup in government spending (particularly in East and North). November demand growth, however, tapered due to festive holidays (Diwali, Chhath) and workers returning to their villages for the same.
The brokerage firm channel checks indicate demand has picked up once again from the second half of December as seasonal improvement in construction activity kicks in. The demand in East has been particularly strong, supported by pre-election spending by the state governments in West Bengal and Assam. Odisha, on the other hand, has seen an uptick in industrial infra demand, it said.
The housing segment is now showing visible pick-up that is being fuelled partially by lower interest rates. It remained the backbone of cement demand during the previous bull cycle of 2003-08. Nevertheless, housing will remain the key volume contributor. Infrastructure is also expected to expand its share in the next five years with rising investments by the central government on roads, railways and irrigation.
While the recent run-up in cement stocks is already factoring in some of this upside, we expect the outlook to remain strong as the sector is likely to witness strong demand not only from infra and construction but from real estate as well due to improved affordability and lower interest rates, ICICI Securities said in cement sector update.