Cement stocks may remain tepid in near term

Likely weak demand over the next few months as the monsoon season gathers pace, coupled with no price hikes, may keep cement stocks tepid in the near term, believe analysts. As a strategy, however, they suggest investors accumulate related stocks on dips, encashing benefits of a rebound in the second half of the current financial year.

- NIKITA VASHISHT

"While a seasonal dip in demand is expected in the near term, several factors suggest a potential rebound later in the year. The government's infrastructure push and a continued focus on affordable housing are expected to drive demand in the medium-to-long term," said Shivani Nyati, head of wealth of Investmart.

Swastika Investors with a long-term horizon, thus, may strategically accumulate shares of fundamentally strong companies, she said, picking Ultratech Cement and JK Lakshmi Cement as her top picks.

Over the past six months, cement stocks have performed mixed on the bourses with The Ramco Cements, Dalmia Bharat, and Nuvoco Vistas falling between 10 per cent and 23 per cent.

Mangalam Cement, Ambuja Cement, ACC, and JK Cement, on the other hand, surged up to 109 per cent, ACE Equity data showed.

By comparison, the Nifty 50 index has gained 13.3 per cent during the period.

Moderating demand