- Damani-Jhunjhunwala also attracted
Mumbai. The Indian stock market has been witnessing a strong boom for the last 17 months, facing the big blow of the Chinese virus COVID epidemic. This boom is widespread and most sectors are participating. While some have more speed. Among them, cement is a sector in which not only foreign and domestic institutional investors but also big market investors like Radhakishan Damani, Rakesh Jhunjhunwala, Dolly Khanna are taking interest and Increasing your investment. The main reason for this is the rapid growth of the cement industry and the increasing business and profits of the companies day by day.
Not only big companies like Ultratech Cement, Ambuja, ACC, Shree Cement, Dalmia Bharat, but also mid and small sized cement companies are helping in increasing sales and profits. are being successful. Due to which almost all the stocks of the cement sector are rising. In the last one year, investors have got good returns ranging from 30% to 180% in cement stocks and analysts are expecting this rally to last.
Growth turned recovery
Analysts say that although all the industrial sectors were badly affected in the lockdown-1 imposed due to the COVID epidemic, but the cement industry is among the few industries which got the first and faster recovery because the central government and all the state governments. The construction work of infrastructure projects continued even in the lockdown. Which directly benefited the cement cement industry. Therefore, recovery came quickly in the cement industry and later this recovery turned into growth due to increase in demand. And now the demand for cement is gaining momentum with the Modi government giving maximum emphasis on infrastructure development. At the same time, the demand for cement will increase further due to the rapid growth of the real estate sector.
Cement prices likely to rise
However, the increase in manufacturing cost of cement companies has some impact on profit margins. High prices of petcoke, coal and diesel are increasing the cost of cement companies, but this factor is not turning negative due to the increasing demand for cement. Secondly, all the companies are also consistently successful in passing this rising cost on the consumers by increasing the price of cement. Even in Lockdown-2, despite the decrease in demand, prices remained almost constant in many states of the country or came down only by 4 to 5%. Although the prices come down every year due to decrease in demand during monsoon, but with the demand coming out after the monsoon, companies start increasing the prices again. Distributors say that prices may increase again from next month.
Increasing profits by paying off debt
A major positive factor in cement stocks is that from UltraTech, Ambuja, ACC to Orient Cement, they are also strengthening their balance sheets by reducing their debt burden. Companies are using the rising profits to pay off their old debts. With the reduction of debt, the profit is increasing more. This is the reason why even big investors are increasing investment in cement stocks. The Radhakishan Damani family has taken a major stake of 21% in India Cement. In Orient Cement, Rakesh Jhunjhunwala has bought 1.22% and Shree Cement promoter Harimohan Bangur has bought 1.59%.