Cement stocks underperform, realisation improvement remains elusive

The rising pet coke and transportation costs remain a cause for concern and limit profitability improvement

Cement majors like UltraTech, ACC, Ambuja and Shree cements have seen their stock prices correct 13-18 per cent since their January highs. While broader indices, too, are down 5-6 per cent from their peaks in end-January, the underperformance by cement stocks has surprised. 

The January-March quarter is seasonally strong quarter. The construction activities start picking up post end of winter season and momentum continues to catch pace till monsoon strikes in June and July.

The underperformance however can be attributed to cement realisations not catching up though volumes have continued to grow. Recent Analysts channel checks suggest that per 50