Investor sentiment for Indian cement sector down

Investor sentiment for Indian cement sector down
30 December 2005


Investor sentiment for the cement industry has been badly hit over the past fortnight and several stocks in this sector have under-performed the Sensex – reports the Business Standard.

For example, Gujarat Ambuja Cement has fallen about 3.1 per cent during this period compared to a 0.2 per cent rise on the Sensex. Grasim, too, has dropped about 3.1 per cent during this period and even ACC has fallen by 3.7 per cent. Even stocks of mid-sized players such as Shree Cement have dipped almost 4.2 per cent during the last fortnight.

On this downtrend in the sector, analysts point to a recent Supreme Court order which has banned overloading of trucks. For most of the cement firms, this development is expected to result in freight costs moving up by approximately 5-6 per cent, point out analysts.

Another factor contributing to reduced investor interest has been severe cold conditions in both the northern and central markets. Colder weather typically leads to reduced construction activity. These two markets typically account for about 36.5 per cent of total cement sales in the country.

Cement despatches had shown a sluggish trend in November, with the top four players reporting a mere 2.12 per cent y-o-y growth to 47.2Mt. And given the cold condition in several northern states, analysts highlight that it is increasingly likely that December cement despatch figures would also be subdued.

Published under Cement News