Shares of mid-and-small sized cement companies are in limelight on the bourses with many of them trading higher by up to 5% in an otherwise weak market.
Madras Cements, Prism Cement, JK Lakshmi Cement, India Cements, and Shree Cement are trading higher in the range of 2-5% on the Bombay Stock Exchange as compared to 0.18% or 33 points fall in benchmark Sensex at 1440 hours.
According to IIFL institutional equities recent report on cement sector reveals that a North-based mid-cap cement companies to deliver higher returns during Q42012 (October-December), driven by 34-44% earnings CAGR (compound annual growth rate) over FY12-15.
“The pace of capacity additions has decelerated and outlook for demand growth has improved, resulting in significantly higher capacity utilisation, particularly in the northern, western and eastern regions,” J Radhakrishnan at IIFL said.
Analyst expects better pricing power for companies in these regions due to improved utilisation and reduced fight for market share. Most companies in these regions have already reached 100% utilisation in 4QFY12.
Among the individual stocks, Madras Cements is trading higher by 4% at Rs 199, its four-year high on the BSE. Prism Cement, JK Lakshmi Cement and India Cements are also up by around 4% each.
