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HeidelbergCement, JK Cement, JK Lakshmi Cement hit 52-week highs

India Cements, JK Lakshmi Cement, Orient Cement and HeidelbergCement India were up 5 per cent to 11 per cent on the BSE.

SI Reporter  |  Mumbai 

Representative Image
Representative Image

Shares of cement manufacturing companies were trading higher by up to 11 per cent on the BSE on back of heavy volumes on expectation of strong demand for cement in the second term of the National Democratic Alliance (NDA).

India Cements, JK Lakshmi Cement, Orient Cement and India were up 5 per cent to 11 per cent, while J K Cement, ACC, Ambuja Cements, were up 3 per cent to 4 per cent on the BSE. At 02:52 pm; the S&P BSE Sensex was up 1.4 per cent at 39,360 points.

(up 8 per cent at Rs 210), (6 per cent at Rs 387) and (3 per cent at Rs 1,023) hit their respective 52-week highs on the BSE in intra-day trade.

The volume growth for the cement industry, according to reports, is expected to be supported by various infrastructure and government programs, like affordable housing during NDA's new tenure.

In its election manifesto, BJP reiterated its focus on ensuring pucca houses for families living in kuchha houses or without access to housing, by 2022. Apart from this, BJP had stated its intent to construct 60,000km of national highways over the next five years, expedite completion of Phase-1 of Bharatmala Project and launch Bharatmala 2.0 Project, which should keep demand for cement buoyant, analysts say.

“As the BJP in its election manifesto has reiterated focus on PMAY and infrastructure, demand for cement is likely to continue to be buyout in the second term of NDA,” said in a report.

“With strong improvement in demand scenario leading to demand growth of around 7 per cent in FY18 and sustained demand growth of around 10 per cent in FY19, we believe all tailwinds are in place to boost cement demand in coming years. Thus, the demand is expected to remain healthy over the next 2-3 years. Further, sharp pricing recovery since Feb’19 is likely to aid the cement companies to report healthier operational performance in current quarter as well as ensuing quarters,” analysts at Reliance Securities said in May month cement sector update.

Notably, incremental demand from proposed “Housing for All” scheme and construction activities of Metro/Irrigation projects are likely to aid utilisation and profitability of the industry in the long-term. We further believe that incremental demand will be higher than incremental supply over the next 3 years, which is expected to aid pricing recovery, it added.

First Published: Fri, May 24 2019. 15:23 IST