Price Hike Sustainability Fears Hammer Cement Stocks

Mumbai, October 22: | Updated: Oct 23 2002, 05:30am hrs
Cement stocks plunged over doubts of the sustainability of a recent price hike. On The Stock Exchange Mumbai, (BSE), the stocks of ACC (down three per cent to Rs 140), Gujrat Ambuja Cements (GACL) (down 1.4 per cent to Rs 167.50) Larsen and Tuobro (L&T) (down 1.3 per cent to Rs 185.80) and Grasim Industries (down 0.59 per cent to Rs 304.50) traded in the red.

Dealers said that the fall in cement shares follows the bargain-hunting witnessed in cement pivotals on the back of a hike in cement prices carried out by cement-makers in the recent past.

For instance, they added, ACC surged nearly six per cent to Rs 144.35 on October 21, 2002, from a low of Rs 136.40 on September 26, 2002. GACL similarly moved up 4.2 per cent to Rs 169.95 on October 21, 2002 from a low of Rs 163 on October 1, 2002, they also said.

Cement analysts said that the absorption of the latest hike of Rs eight per 50 kg bag to Rs 135-140 level seems difficult at the moment, with the markets in the west and south witnessing a supply overhang.

Analysts are far from optimistic about the cement sector as they fear that the second quarter of the current fiscal shall prove to be one of the worst quarters in the cement companies in which they are expected to show a sharp decline of nearly 40 to 45 per cent in the net profit of the cement companies, they further added.