Cement stocks rally ahead of budget

Cement stocks zoomed on Tuesday on expectations of pro-industry steps in the Union Budget and a sentiment booster provided by the Union Rail Budget, which eliminated peak season surcharge on freight for transportation of cement.

Leading cement stocks, including ACC, UltraTech, Grasim, Ambuja Cements, Shree Cements, Binani Cement, Mangalam Cement and JK Cement, rose on the bourses on expectations that the Union Budget would introduce industry-friendly measures.

However, sector analysts ruled out any link in share price rises to the rail budget. Rather, they said, it was the expectation of rationalisation of excise duty structure in cement, which has stoked strong sentiment across the sector.

The Grasim scrip rose over 5 per cent to close the day at Rs 3,042.70 as against the previous close of Rs 2,896.05. Similarly, ACC was up 1.53 per cent (Rs 830.90), UltraTech 0.78 per cent (Rs 910.65), Binani Cement 3.09 per cent (Rs 86.70), Ambuja Cements 0.65 per cent (Rs 123.35), Shree Cement 1.68 per cent (Rs 1,250) and JK Cement 0.80 per cent (Rs 163.25).

In last year's budget, the government had brought in the dual duty structure in order to rein in soaring cement prices.

The excise on cement whose retail price did not exceed Rs 190 a bag of 50 kg, the government had imposed an excise of Rs 350 a tonne. For those whose retail rates exceeded Rs 190 a bag, excise duty was fixed at Rs 600 a tonne.

However, in May, the government set the excise duty of 12 per cent for retail sales for cement whose retail price exceeded Rs 190 a bag but under Rs 250 a bag.

Analysts said the removal of peak season surcharge on cement freight will only be in areas where the 50 new terminals will be set up for storage purposes. Hence, there will be no immediate impact on the industry.

On an average, around 45 per cent of the entire cement transportation is through the railway route.