The Hindu Business Line : Cement cos fail to sustain gains on profit taking

Kolkata, Feb. 7 Markets on Thursday soaked up intra-day gains made in cement stocks. According to brokers, the psychology of cashing-out whatever profits were available strongly dominated the mind space.

aggressive pricing

According to Mr Arun Kejriwal, “when a sense of uncertainty looms large, everyone is really looking at aggressive pricing as a suspect.”

Mr V.K. Sharma of Anagram Stockbroking felt the margin expansion for the cement companies might slowdown in the short-term.

“The current capacities and imports appear to match the demand adequately,” he said.

The last monthly figures suggested an element of flatness, Ms Shina Mukadam of IDBI Capital pointed out.

“Quarterly results are ok, but there are also cost increases. Though it is still not a cause of worry, exercising the pricing power enjoyed by the manufacturers last year may be a bit difficult now,” she added.

infrastructure projects

There were expectations of raising cement prices by Rs 2 to Rs 3 a tonne in the Western and Southern regions, but it did not happen, the market sources said.

Going by the slew of infrastructure projects and SEZs in the pipeline, industry insiders are hopeful of a sustainable growth of 10 per cent in demand for cement in the next three years. Until recently, cement companies were running their plants at full capacities.

The current capacity is placed at 177 million tonnes.

The industry’s total planned capacity addition by 2009/10 is 100 million tonnes.

Fears

But there is a lurking apprehension that the economy may cool down a bit this year and there could be delays in implementation of some of the mega and medium-size projects, industry sources said.

ACC, which surged to Rs 803, managed to finish in the green (up 1 per cent) at Rs 772. Other cement stocks, however, could not close with a gain.

Grasim finished down 2.41 per cent at Rs 2,819 after touching the day’s high at Rs 3,012 and Ultratech closed more than one per cent lower at Rs 855.

Ambuja Cements, Ambuja Cement Eastern, and India Cements also showed the same trend of going up in the session but finishing with declines.

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