Where is the cement industry headed from here?

Moneycontrol Bureau

Having battled a sluggish demand scenario in the first half of the year, the cement sector can pin hopes of revival on the back of scheduled elections across states in the coming year.  Though significant price correction remained far fetched for most cement companies, industry watchers say a 5% increase in price is inevitable in the year to come by, as dealers have not been able to pass on cost pressures in 2012 and are keen to do so.

Apart from lack of pricing power and sluggish demand during the year, a very critical event that rocked the industry was the Competition Commission of India (CCI) order directing 11 companies to pay a fine of Rs 6,300, on being proved that they had formed a cartel. To everyone's surprise, shares of impacted companies declined only 0.5-4.5% post the CCI order pronounced in June Industry watchers say, the market had already discounted this news. The appellate authority is currently hearing cement companies’ plea against the CCI order. However, brokerages alert that any pull-back in share prices in ACC, Ambuja Cements or UltraTech will be an enhanced buying opportunity as the industry is on the anvil of an up-cycle.