Cement stocks rallied nearly 20 per cent in Wednesday’s trade as most of the countries eased coronavirus-led lockdown restrictions which is likely to provide a fillip to the construction activity. Birla Corporation share price soared 19.12 per cent to hit day’s high of Rs 580 apiece. The stock has gained nearly 40 per cent in two trading sessions. In less than 15 trading days, Birla Corporation share price has increased to Rs 580 from Rs 372.50. However, the stock hit its 52-week high of Rs 807.60 in February this year, since then Birla Corporation shares have climbed off over 28 per cent. Many brokerages have turned bullish on the stock with a ‘buy’ rating to it and upside of 20 per cent. “While revenues during the first lockdown were almost nil, manufacturing activities were allowed to resume production in a phased manner from April 20,” ICICI Direct Research said in a report.
Among other cement and cement products stocks, Dalmia Bharat shares surged 8 per cent, Anjani Portland Cement shares advanced 11.42 per cent, Shri Keshav Cements and Infra, and Keerthi Industries shares hit 5 per cent upper circuit each. While JK Lakshmi Cement shares were up 4 per cent. In comparison, S&P BSE Sensex was trading 1.09 per cent higher at 30,943. Last week, Birla Corporation reported a 52 per cent rise in consolidated net profit at Rs 194.73 crore in the quarter ended March 31. The cement company had clocked a profit of Rs 128.19 crore in the corresponding quarter of the preceding fiscal. “While FY21 would be adversely impacted due to COVID-19, the outlook for FY22E remains positive as upcoming capacities should drive market share gains,” Motilal Oswal said in its research report, maintaining a ‘buy’ rating to the stock with an upside of 20 per cent.
ICICI Direct Research is also bullish on the stock and has revised its target price with an upside of 5 per cent. “While the ongoing expansion may increase the debt burden in the medium term, the company’s healthy asset utilisations, healthy margin profile remain key positives, which will help the company to ride this medium-term challenges,” ICICI Direct Research said in its recent report. We upgrade the stock to BUY with a revised target price of Rs 610.