Ambuja Cements not a cheap stock

CNBC-TV18’s Executive Editor, Udayan Mukherjee – It is a rotational buying in cement stocks. At some point cement would have given you a pullback because they just got hammered and hammered without any respite. It hasn’t given any kind of relief rally beyond a single day’s upmove. So it had to come, the way Ambuja Cements fell one way from the Rs 150 high to Rs 80, the way India Cements collapsed from Rs 310 to Rs 150. At some point there would have been some buying because even beaten down dead cats bounce once or twice.

But the going is stacked against them. So even if we get a rally for the next couple of days; gets Ambuja Cements back to triple digits, India cements back to Rs 175-180 which is not beyond the realm of possibility in a technical bounce back. One needs to be careful because Ambuja despite the fall, is still trading at USD 150 EV/Tonne and that is not the cheapest stock one can buy across the world.
 
The headwinds are tremendous, PE multiples are meaningless in this kind of a situation where cement prices might come under pressure. I think it’s a technical pull back. It might have little bit left in it.  But no, I have heard some people say that cement is the next big opportunity out in the market; I would be very surprised if that happened.