Strong Sept volume growth strengthens cement counters

Our Markets Bureau

Mumbai, Oct 3: Strong numbers in volume growth reported by cement majors like ACC, Gujarat Ambuja (GACL) had a positive impact on the bourses on Wednesday. Most of the these stocks reported handsome gains on a day when activity was lacklustre and expectations were high over the strong second quarter performance from these companies.

This has supplemented the overall improvement in cement stock price. ACC stock price closed the day at Rs 122.30, up Rs 5.35, while GACL closed at Rs 153.10, up Rs 3.20. Grasim recorded a gain of Rs 9.70 before settling at Rs 258, while L&T was marginally higher at Rs 160.50, up Rs 1.05.

According to market sources: "These numbers may seem encouraging from the investors and manufacturers point of view, but the trends are quite surprising. Conventionally, for the quarter to September, the numbers have always remained some what subdued compared to the other three quarters."

In the western region, mainly in the Gujarat market, the demand was expected to remain strong, which, in fact has reflected in GACL’s numbers, rest of the region was expected to show a slowdown in the cement dispatches.

Yet, ACC came out with strong number that is partly because of full operation of its Wadi Plant (new plant). It led the performance chart with more than 27 per cent rise in shipments. GACL followed with a 19 per cent surge in volume growth. The numbers for other cement majors like Grasim, L&T are also expected to show good growth. The golden quadrilateral project of the government will also add to this performance, feel analysts.

ACC’s shipments rose by 27.35 per cent in September 2001 as compared to last year, while its production increased by 35.4 per cent. Deliveries were higher at 9,87,000 tonne from 7,75,000 tonne in the same month a year ago. Production rose to 9,83,000 tonne from 7,26,000 tonne.

ACC’s cement shipments in April-September were 5.829 million tonne (mt), up 10.31 per cent from 5.284 mt a year ago. Production in April-September was up 10.57 per cent to 5.834 mt from 5.276 mt last year.

The sector is also aided by favourable trend in oil prices, that are currently quoting at two years low. Power form substantial part of input cost and most of the power is generated through oil-based gensets. Any change in the oil prices have substantial bearing on the performance of the cement sector, said analysts tracking cement sector.