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Price hike triggers cement stock rally

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BS Reporter Mumbai
Last Updated : Jan 21 2013 | 4:48 AM IST

Cement stocks rose on Tuesday after south-based manufacturers, in an unexpected move, raised prices by Rs 25-40 for a 50-kg bag.

After this, the average price in the southern market has risen to Rs 195 a bag from Rs 168.

Though the shares of southern manufacturers rose the most, other companies also buzzed up in line. The Andhra Cements scrip registered the highest gain of 16.54 per cent. It was followed by Madras Cements, which rose 14 per cent. UltraTech Cement, a pan-country player with a substantial presence in the South, was up 7.7 per cent at Rs 993.30. ACC rose 6.67 per cent to Rs 962.70.

The Bombay Stock Exchange benchmark Sensex closed up 0.46 per cent.

Industry experts said the increase might bring respite to companies that had been making losses at the Ebitda (earnings before interest, tax, depreciation and amortisation) level ever since the quarter began. However, they added, a question mark remained whether such a hike at a time the industry was facing a surplus would be sustainable.

The south-based companies had made an unsuccessful attempt to increase prices by Rs 5-10 a bag earlier in the quarter. It was followed by a price cut. “Whether the companies can manage it this time is yet to be seen,” said an industry analyst.

With Tuesday’s rise, the price in Andhra Pradesh is Rs 155-160 a bag, whereas the price in Karnataka and Tamil Nadu is close to Rs 200 a bag. Kerala tops its southern peers, as the price there is around Rs 220 a bag.

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Interestingly, prices in the South are still low compared with North, West, Central and East India. The average national price is around Rs 225 a bag.

JK Cement, Sagar Cements, India Cements and Bharthi Cement are among the other major players in the South.

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First Published: Sep 08 2010 | 12:07 AM IST

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