Sales forecast may help cement shares

Cement sector shares are poised for further gains, with Cement Manufacturers' Association (CMA) predicting a healthy sales growth of over seven per cent in the current fiscal.

"The industry is hopeful of attaining a 7-8 per cent sales growth in 2003-04," CMA president B L Jain said recently.

Already, the stock prices of major cement companies have been on a northward trip in the last three months. In fact, cement shares had perked up as soon as the contours of the monsoon became clear.

From August 5 to today's close on the Bombay Stock Exchange, the market capitalisation of 27 cement companies has increased 13.47 per cent from Rs 10,546.82 crore to Rs 11,967.94 crore. This marks an absolute rise of Rs 1421.12 crore in market cap during this period.

The ACC stock has moved up 19.74 per cent in this period, from Rs 195.05 to Rs 233.55, the Gujarat Ambuja Cement scrip has appreciated from Rs 223.45 to Rs 286.00, up 27.99 per cent, India Cements has gained 13.73 per cent from Rs 28.05 to Rs 31.90, and the Birla Corporation scrip has increased 66.35 per cent from Rs 37.00 to Rs 61.55.

The stock price of Ambuja Cement Eastern has improved from Rs 31.20 to Rs 37.60, up 20.51 per cent, of Dalmia Cement (Bharat) from Rs 215.15 to Rs 231.85, up 7.76 per cent, Gujarat Sidhee Cement has appreciated from Rs 6.70 to Rs 6.82, up 1.79 per cent, OCL India has gained from Rs 155.25 to Rs 220.10, up 41.77 per cent, Prism Cement has increased from Rs 9.50 to Rs 10.35, up 8.95 per cent, Shree Cement has appreciated from Rs 97.10 to Rs 119.55, up 23.12 per cent, and the Somani Cement scrip has increased from Rs 3.00 to Rs 4.83, up 61.00 per cent.

But smaller companies have seen a depreciation in their stock prices during the same period.

The share price of Priyadarshini Cement has declined from Rs 17.46 to Rs 13.65 ( down 21.82 per cent), Sagar Cements has fallen from Rs 10.32 to Rs 7.00 (32.17 per cent fall), Saurashtra Cement has declined from Rs 12.49 to Rs 10.41(down 16.65 per cent ), Shiva Cement has declined from Rs 2.05 to Rs 1.95, Shree Digvijay Cement has fallen from Rs 41.00 to Rs 30.40 (down 25.85 per cent).

The CMA's prediction emanates from the positive outlook on the economy due to the good monsoon recorded in the most parts of the country, Jain said, adding the demand for cement has been growing due to the spurt in housing and road construction activity.

The cement industry posted a 8.7 per cent growth in 2002-03 whereas the economy reported a drop in GDP growth last fiscal. CMA also expects that cement and clinker exports can easily be doubled to 14 million tonnes in the next 3-4 years.

Exports of cement and clinker touched a record high of seven million tonne last year, which amounted to a 35 per cent jump over the previous year's 5.4 million tonne.