With Q2 results round the corner, the market appears to be reinforcing its interest in the cement sector. Analysts continue to remain bullish on the sector and aver that rising cement prices through FY07 and most of FY08 will result in robust profits for the cement companies.

A leading domestic brokerage has maintained that overall the sector will witness continued buoyancy for the next 12-15 months. The general perception being that cement companies will report the same or even more EBITDA/tonne in Q2 FY07 as they did in Q1 FY07. Marketmen said that demand remained buoyant in spite of it being the monsoon quarter. Thus, demand-supply scenario continued to remain tight given that incremental capacities scheduled for March 2008 are likely to go commercial by end FY08.

Cement stocks that have seen a 10-13 per cent hike month on month include Grasim, India Cements and Shree Cement.

Deeptha Rajkumar

(This article was published in the Business Line print edition dated September 27, 2006)
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