Mid-cap cement shares rally on hopes of strong Q2 earnings

Prism Cement, Madras Cements, JK Lakshmi Cement, India Cements among key gainers

Shares of cement manufacturers, mainly mid-and-small sized companies, have rallied on the bourses after Heidelberg Cement India reported a strong net profit growth for the quarter ended September 2012 (Q2FY13).

Besides HeidelbergCement India, Prism Cement, Madras Cements,JK Lakshmi Cement, India Cements and Dalmia Bharat Enterprises are trading higher by 3-6% on the Bombay Stock Exchange, as against a marginal 0.27% fall in the benchmark Sensex at 1000 hours.

HeidelbergCement India is trading higher by 3.3% at Rs 55.70, also its two year high, on reporting a net profit of Rs 7.51 crore in Q2 on back of higher realisation. The cement-maker had posted a loss of Rs 8.16 crore in the corresponding quarter of previous year. Net sales grew 24% at Rs 255 crore in Q2 on year-on-year basis.

 

“Despite weak cement dispatches due to cyclical factors, owing to considerable improvement in realization, cement companies are expected to report an improvement in their top-line and bottom-line performances during the recently concluded quarter,” according to analyst at Angel Broking.

“Going forward, the cement industry’s profitability should benefit from supply disciple led higher cement prices of Rs 20-25 per bag year-on-year as well as lower fuel costs for manufactures as international coal prices have declined around 20% y-o-y,” said analyst at Karvy Stock Broking in recent report.