In past one month, most of the frontline cement stocks have outperformed the market by surging more than 10% after reported a good volume growth in April-June quarter results.
Among the individual stocks, Ambuja Cements up 4% at Rs 238, surging 23% in past one month after the company reported steady revenue growth of 5.7% YoY at Rs 30.2 billion in June quarter, driven by volume growth. The company’s volume at 6.41mt grew 5.6% YoY driven by strong demand in the eastern region.
According to analyst at Reliance Securities d,emand momentum is expected to pick-up quickly post monsoon, as improvement in rural/trade consumption and faster infrastructure development on the back of upcoming elections in next couple of months will remain the key demand drivers.
Going forward, better monsoons, hike in minimum support prices and pre-election spending are expected to lead to a better demand from rural regions (that have remained a laggard till now). This, coupled with higher infra spend, is expected to drive cement demand, according to broking firm ICICI Securities.
“While cement demand witnessed a seasonal impact in July’18, as widespread monsoon across the country led the construction activities to a standstill in most parts, cement prices broadly remained resilient with marginal average correction of around Rs5/bag at an all-India level,” Reliance Securities said in the cement sector monthly update.
Notably, nationwide transport strikes created supply shortage in several pockets, which aided the prices after 20th July’18. As per dealers, sales volume declined in the range of 5-20% MoM, while it remained better on YoY comparison, it added.