Cement shares soar up to 17%; ACC, Birla Corp, JK Lakshmi hit 52-week highs

Analysts believe cement demand would remain healthy aided by expedited pre-election government spend, continued focus of infrastructure development.

Shares of cement companies were in demand and rallied up to 17 per cent backed by heavy volumes on expectations of healthy demand. Prism Johnson, Birla Corporation, Grasim Industries, India Cements, ACC and JK Lakshmi Cement were up over 4 per cent. In comparison, the S&P BSE Sensex was up 0.21 per cent at 71,583 at 02:45 pm.

Analysts believe cement demand would remain healthy aided by expedited pre-election government spend, continued focus of government on infrastructure development, and sustained demand from the residential housing segment.

Further, easing power & fuel costs would continue to cushion operating profit margins. The large players in the industry continue to embark on capacity expansion plans over the medium to long term, analysts at Sharekhan said.

Moody's Investors Service projects India's demand for cement will grow annually at approximately 6 per cent over the upcoming years, primarily driven by the housing sector, which constitutes 60 per cent-65 per cent of the country's cement consumption. India's long term trend in demographic growth will underpin a surge in housing demand, and consequently for building materials like cement. Concurrently, India's escalating urbanization and development of infrastructure such as roads, ports, and airports will further bolster cement demand, the global rating agency said.

Among individual stocks, Prism Johnson hit a record high of Rs 198.90, as it surged 17 per cent on the back of over 10-fold jump in average trading volumes. A combined 21.2 million equity shares representing 4.2 per cent of total equity of the company changed hands on the NSE and BSE.

Shares of ACC hit a 52-week high of Rs 2,644.95, rallied 5 per cent on the BSE. The stock of Adani Group company is trading at its highest level since December 2022. It had hit a record high of Rs 2,785 on September 14, 2022.

ACC said the cement demand in India will continue to grow at 7-8 per cent, primarily fuelled by investments in infrastructure and large-scale residential housing projects.

"This growth aligns strategically with the broader economic development goals of the country, as we move from a USD 3.5 trillion to USD 7.3 trillion economy by 2030. Opportunity buy of low cost petcoke will help to further optimise fuel costs in the coming quarters and will augur well in our cost optimisation journey", the company said.