Cement counters edged higher today amid a flat stock market on reports that cement makers were planning to hike prices in Mumbai.
The Grasim Industries share was up 2.6 per cent to Rs 324.60 today, while Larsen & Toubro rose 2.07 per cent to Rs 224.20, ACC climbed 2.22 per cent to Rs 170.10, and Gujarat Ambuja Cements (GACL) edged up 0.29 per cent to Rs 210.95.
According to market tattle, cement makers were planning to raise both retail and wholesale prices in Mumbai starting this week.
While wholesale cement prices are expected to go up to Rs 163-165 per 50 kg bag, retail cement prices are expected to rise by about Rs 7 per 50 kg bag to Rs 176-180.
The fresh hike in cement prices is a result of cartelisation by cement makers, sources said.
Cement shares have been among the star performers on the bourses, having gone up sharply on the back of a rise in prices, strong first half (ended September 2001) financials of sector majors and an increase in post-monsoon despatches.
Demand for the commodity slackens during the July-September monsoons, and rises afterwards. Analysts said with Grasim taking a 10 per cent stake in L&T last month, two consolidated forces have emerged in the sector - the Grasim-L&T combine and the ACC-Gujarat Ambuja Cements combine.
These two forces are expected to control about 48 per cent of the total cement capacity and, by default, have solid pricing clout.
Last week, the Cement Manufacturers Association had said total despatches went up 7.4 per cent to 82.70 lakh tonne in November from 77 lakh tonne in November 2000.
For April-November 2001, despatches rose 5.8 per cent to 660 lakh tonne from 623.90 lakh tonne in the corresponding period of the previous year.
Analysts say despatches will gain further momentum, driven by rural demand after a good monsoon this year.
Gujarat and Rajasthan (which were affected last year due to drought), have witnessed good monsoon this year, and are likely to be the major demand generators.
Cement companies have come out with strong second-quarter results on the back of firm cement prices.
ACC reported a net profit of Rs 17.03 crore in second quarter as against a loss of Rs 15.53 crore in the corresponding period of the previous year.
L&T's net profit jumped 224 per cent to Rs 40.46 crore in second quarter on a 2 per cent growth in topline to Rs 1,775.82 crore.
On the other hand, Gujarat Ambuja Cements registered a 112 per cent surge in second quarter net profit to Rs 53.23 crore on a 19 per cent rise in net sales to Rs 299.32 crore.
