India: Cement shares in demand

Byrebecca3360

Updated Tue, 01 Apr 2014 10:54:29 GMT

Shares of cement makers such as Ambuja Cements, ACC, UltraTech Cement, Ramco Cements, Dalmia Bharat, India Cements, JK Cement and JK Lakshmi Cement are up more than 2 per cent each on the Bombay Stock Exchange (BSE).

Ramco Cements has rallied nearly 13 per cent to INR 226 in intra-day trades on the BSE after CLSA recommend ‘Buy’ rating on the stock with a price target of INR 260 per share.

CLSA says Ramco is among the largest and the most efficient cement players in south India and will benefit from improving demand in its region.

Dalmia Bharat has also hit the upper circuit of 10 per cent at INR 261 on the BSE. On March 24, the company's subsidiary company, Dalmia Cement (Bharat) Limited, signed definitive agreements for acquisition of 74 per cent stake in Bokaro Jaypee Cement Limited at a consideration of INR 1,150 crore.

Analysts at Motilal Oswal Securities maintain a ‘Buy’ rating on the stock with a target price of INR 319. Analysts believe stock re-rating hinges upon improvement in financial performance driven by improvement in operations, especially those in the North-East.

Meanwhile, analysts at HDFC Securities in a report dated March 13, 2014 said the cement companies with high exposure to the North will see strong realisation and profitability gains. However, prices in the South remain weak and companies focusing on this region will likely witness a realisation decline in the quarter.