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Though there are no overall sector sales numbers available as competition watchdog Competition Commission of India (CCI) had barred the industry body from collecting data last June, sector executives told Business Standard that February turned out to be a discouraging month.
On the BSE, shares of ACC, Ambuja and Shree Cement lost between 2.5 and four per cent on Monday while those of Aditya Birla group’s UltraTech lost a little less than two per cent. Though these stocks touched lower levels during intra-day trade, they had recovered by the time trade ended.
Two other north-based majors, JK Cement and JK Lakshmi Cement, were hit hard as their shares lost over five per cent value while the Heidelberg stock was down four per cent. The fall came on a day when the benchmark indices witnessed a marginal erosion of 20 basis points.
Several of these counters are trading much below their 52-week highs. For instance, ACC which touched a high of Rs 1,515, lost around 20 per cent, while Ambuja and Shree Cement shed about 15 per cent from those levels. Mid- and small-cap players like JK Cement, JK Lakshmi and Heidelberg are trading as much as 33 per cent lower than their 52-week highs.
The cement sector, which normally enjoys peak construction phase and hence higher sales during the December to May period of the year, has failed to see a surge in demand for the building commodity so far this season.
| Company | Closed (Rs/share) | Change (%) |
| J K Lakshmi | 118.30 | -5.09 |
| J K Cement | 294 | -5.05 |
| Heidelberg | 40.35 | -4.16 |
| ACC | 1,220.05 | -3.79 |
| Shree Cements | 4,160 | -3.32 |
| Ambuja | 186.70 | -2.89 |
| UltraTech | 1,849 | -1.90 |
“We had expected February to bring some turnaround, but demand was abysmal,” explains a top executive of a North-based cement major. According to him, poor sales in the month may have its negative impact on Q4 earnings, too.
According to sector analysts, north-based players are affected, in particular. “Winters hindered construction activity and rains for almost a fortnight during the month in the northern region made the scenario further worse for cement makers,” said a research analyst at a Mumbai-based brokerage house.
Interestingly, the last fortnight has seen cement prices firming up. With the steepest rise in the eastern region (mainly due to logistical issues) and in Andhra Pradesh, the all-India average price of a 50-kg bag of cement has touched Rs 303. However, compared with what the sector commanded in October last year, current prices are still Rs 5-7 less for a 50-kg bag.
When asked why cement prices are rising despite poor demand, the executive (cited above) said there was anticipation of a surge in demand, going forward. However, he was quick to add that recent hikes in freight rates due to diesel price hike and other input costs, would wipe out any potential gains from cement price hikes.
Currently, the country’s cement sector has a manufacturing capacity of 330 million tonnes per annum, which is significantly higher than actual consumption. Players like UltraTech, ACC, Ambuja, Jaiprakash, Shree Cement and India Cements control more than half of the Indian market.
