Cement Stocks - Victim of cartelisation allegations ?

Yesterday we carried story of UPL, where Electronic Media played dirty in colluding with Big investors. Another instance is of the Competition Commission of India (“CCI”) having initiated an investigation against cement companies in India for alleged anti-competitive behavior, highlighted repeatedly by Electronic Media, which made share price of cement stocks falling on last Thursday.

It is usual of CCI to examine spike in prices of commodities and products, which is being watched  on a continuous basis by CCI. Infact, post monsoon, every year, it is usual to see cement price rising, while recent increase in Brent Crude by over 12% in last one month, increased input cost of cement companies, as freight (inward and outward)  is a major cost input.

Large investors were seen taking bullish view on cement stocks, with good tailwind seen for the next 12 months, where volume increase of at least 12% plus is seen, as cement consumption is seen 100-200 bps higher of GDP growth, which is projected at 11% for FY 22.  But share price of cement stocks rose by 25% to 45% in last couple of months, thus giving headache to fund managers. So, again they being reminded of Electronic Media, to create near term panic, make share price fall, enable them to mop up in a big way and thereafter, report  that CCI found price increase in sync to rise in cost of production.

In the process grind small investors, as they are destined to loose, make big fish grow big and merry the move. Tumhari bhi jai jai ............. :)