Cement companies' valuation hits new peaks despite weak earnings

A continued slowdown in revenue growth and the recent contraction in profit have created an imbalance between cement companies' earnings fundamentals and market capitalisation

There has been a sharp slowdown in revenue and profit growth in the cement sector in recent quarters but it is yet to show in the share prices of cement companies.

On the contrary, there has been a rally in cement stocks and a re-rating of their equity valuation in the past three years despite an earnings contraction during the period.
 

The combined market capitalisation of 35 listed cement companies in the Business Standard sample was up 29 per cent between September 2021 and September 2024 despite a 29.1 per cent decline in these companies’ net profit on