Cement stocks crumble

Cement stocks have literally crumbled today. All across the board, the stocks – Ultratech, Ambuja, ACC, Shree Cement, India Cement, Ramco, JK Lakshmi, Dalmia Bharat, Orient Cement, Birla Corp, JK Cement are down in the red.

Adani, with his buying of Holcim has surely shaken up the sector; and in this wake, to retain its position, Ultratech announced a capex of R.12,886 crore for expanding the grinding capacity by 22.6 mtpa through new – greenfield, as well as expansion of existing capacities, brownfield. This is to be funded via a mix of debt and internal accrual.

Cement stocks are down as immediately in the short term, the inflationary pressure is expected to have an impact on the margins. Also with monsoon being a lean period seasonally, marketmen feel that cement stocks could underperform.

Yet, long term outlook is expected to remain good as government plans to spend Rs 7.5 trillion this year to build roads and ports to boost growth.