Ban ease boosts cement stocks

The free-falling cement stocks got a boost on Wednesday, a day after the government partially lifted the ban on cement exports, imposed in April this year.

Gujarat-based cement firms, in particular, registered major gains as the government has allowed cement exports only from Gujarat ports.

Experts said that UltraTech and Ambuja Cements would be the main beneficiaries of the latest government step. Ambuja Cements, which had slipped below Rs 100 a share, galloped and closed at Rs 104.10 (Rs 97.60), up 6.66 per cent. 

FIRM GAINS
Company	Share price (in Rs)	% change*
ACC	668.65	2.00
Ambuja	104.10	6.66
Sanghi Ind	63.50	2.01
Saurashtra	35.30	6.17
Gujarat Sidhee	21.70	3.83
UltraTech	655.20	3.04
India Cement	162.55	3.67
Grasim	2237.70	1.74
Binani	65.05	0.46
Shree Cement	833.05	0.40
* Over previous closing price Source : Bombay Stock Exchange

Other stocks in the sector that registered gains between 2 and 4 per cent were Sanghi Industries (Rs 63.50), UltraTech (Rs 655.20), Saurashtra Cement (Rs 35.30), Gujarat Sidhee (Rs 21.70) and India Cement (Rs 162.55).

The frontline cement stocks, however, could not perform on a par with that of the Gujarat-based cement firms. ACC "� the country's largest cement-maker "� closed at Rs 668.65, up 2 per cent, where as Grasim and Shree Cement registered gains of 1.74 per cent and 0.4 per cent respectively.

However, industry experts said that at a time when cement stocks were trading at their year's lows, such a rally was a short-term phenomenon.

The cement industry was entering its cyclical downtrend with no room to increase prices further and excess of capacities coming on stream, they said.

Hitesh Agarwal, research head, Angel Broking, said, "The lifting of ban has come as a relief only for those cement companies located in the western coast of the country. If the ban on exports was not lifted, the situation could have worsened during the upcoming monsoon period. The sector will remain an underperformer at least for the next 12 months."

Another cement analyst with a domestic broking house, who did not want to be named, said that cement stocks might sustain at these levels for the time being, but added that the sector had all the negative triggers and the possibility of share prices going up was very low.