HeidelbergCement (up 8 per cent at Rs 210), JK Lakshmi Cement (6 per cent at Rs 387) and JK Cement (3 per cent at Rs 1,023) hit their respective 52-week highs on the BSE in intra-day trade.
The volume growth for the cement industry, according to reports, is expected to be supported by various infrastructure and government programs, like affordable housing during NDA's new tenure.
In its election manifesto, BJP reiterated its focus on ensuring kuchha houses or without access to housing, by 2022. Apart from this, BJP had stated its intent to construct 60,000km of national highways over the next five years, expedite completion of Phase-1 of Bharatmala Project and launch Bharatmala 2.0 Project, which should keep demand for cement buoyant, analysts say.
“As the BJP in its election manifesto has reiterated focus on PMAY and infrastructure, demand for cement is likely to continue to be buyout in the second term of NDA,” Elara Capital said in a report.
“With strong improvement in demand scenario leading to demand growth of around 7 per cent in FY18 and sustained demand growth of around 10 per cent in FY19, we believe all tailwinds are in place to boost cement demand in coming years. Thus, the demand is expected to remain healthy over the next 2-3 years. Further, sharp pricing recovery since Feb’19 is likely to aid the cement companies to report healthier operational performance in current quarter as well as ensuing quarters,” analysts at Reliance Securities said in May month cement sector update.
Notably, incremental demand from proposed “Housing for All” scheme and construction activities of Metro/Irrigation projects are likely to aid utilisation and profitability of the industry in the long-term. We further believe that incremental demand will be higher than incremental supply over the next 3 years, which is expected to aid pricing recovery, it added.