According to Mr Deepak Jain of Anagram Stockbroking, the main trigger for optimism in Indian cement stocks was the expectation of a good Q4 numbers from cement companies. "The seasonality factor makes third and fourth quarters very important for the industry. Normally, they are the best ones for cement companies, as prices remain firm," he added.
Renewed interest is also being witnessed in cement stocks after Gujarat Ambuja Cements Ltd announced that its board will consider interim dividend, bonus and stock split on March 31, 2005.
Until the end of March this year, northern, central and eastern manufacturing units have been seeing high degree of capacity utilisation. The current combined capacity utilisation is estimated to be over 90 per cent, according to industry observers. Going forward, high utilisation levels will translate into sustainable firm price scenario analysts expected.
"The southern regions, on the other hand will take another 18-24 months to cover excess demand-supply gap. There is limited capacity addition by Shree Cement Dalmia Cement and ACC which will be easily absorbed" Mr Jain added.
Long-term industry consolidation and firm pricing scenario are likely to benefit all players. The scenario is most favourable for north and east based cement companies, industry insiders claim. According to a shipping industry source, the increasing volume of exports with better margins from Gujarat to Gulf region has served as added booster for the some players in the west coast.
"Some of the players taking advantage of the proximity to the port and having favourable logistic advantage have banked on clinker exports to the West Asian countries, which have of late been seeing unprecedented growth construction activity," an industry source pointed out.