Invest in cement stocks: Rajen Shah

Excerpts from Your Stocks on CNBC-TV18 Watch the full show » RELATED NEWS Bhambwani upbeat on Shree Cements, India Cements Sell Ambuja Cements; target Rs 87: Anand Rathi Buy Ambuja Cements closer to Rs 92-93: Baliga Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

Invest in cement stocks, says Rajen Shah of Angel Broking.

Shah told CNBC-TV18, "Certainly good time to invest in cement companies in fact I would recommend south based companies more than any company across the country. I think Madras Cement and India Cement turned out to be our top picks. By the end of this year Ambuja Cement will have a capacity of about 27 million tonne, marketcap is about 16,000 crore, so you are getting it for about 550 crore per million tonne."

He further added, "ACC by the end of this year will have 30 million tonne, marketcap is about 16,500 or so, so you are getting it for about 525-530 crore per million tonne. If you see south based companies, India Cement 13 million tonne, you are getting it for 3,300 crore. In case of India Cement we also need to keep in mind that the base price for Indian Premier League (IPL) team has been fixed at USD 25 million that's about 900 crore. So if you take out 900 crore from 3,200 crore of marketcap you are getting a company, India Cements 13 million tonne for 2,200 crore, so 200 crore per million tonne."

"Madras Cement 10 million tonne for 2,700 crore, so you are getting it too cheap. I think the best stocks in this industry are India Cement and Madras Cement and over the next two year we will see a clear out performance of India Cement and Madras Cement vis-à-vis any cement pair in this industry."