Shares of UltraTech, Shree Cement, Ambuja, ACC, Ramco and JK Lakshmi Cement plastered strong gains in trade, rising 2-6 percent, while broader indices opened lower on September 6. Shree Cement and UltraTech Cement were the top two gainers in the Nifty. Ambuja Cement was among the top five active shares on the NSE with volumes of 25,706,401.
Experts remain of the view that the sector is poised for a re-rating after Adani group’s acquisition of Holcim’s stake in ACC, Ambuja. Morgan Stanley Asia on September 2 bought 9.4 lakh shares of ACC for over Rs 215 crore through an open market transaction. According to bulk deal data available with the National Stock Exchange (NSE), Morgan Stanley Asia (Singapore) Pte purchased 9,41,557 shares of the company.
On August 26, Adani launched Rs 31,000 crore open offer to buy 26 percent additional stake from public shareholder in ACC, Ambuja Cements.
“Cement companies will see a strong H2 as input cost pressures decline & realisations improve,” said Krishna Kumar Karwa of Emkay Global. The brokerage has Buy call on UltraTech Cement with a target price of Rs 7,100, and a Buy call on Shree Cement with a target price of Rs 23,550. Meanwhile, Axis Securities has Buy call on JK Cement with a target price of Rs 3,020.
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Reports suggest that cement companies have hiked prices up to Rs 20 per bag in west/east regions for September 2022. The recent price hike comes after fall in cement prices by approximately Rs 40 to 60 per bag since May 2022. It is noteworthy to mention here that domestic petcoke prices have fallen 25% from their peak.
Speaking to CNBC-TV18, Aditya Saraogi of Birla Corp said, “We have increased prices by Rs 15-20/bag this month and we believe demand will remain robust.” The company is aiming for volume growth of 15% in FY23.
The stocks continue to gain shuddering off the pressure from CCI scanner on cement cartelisation. Investigation conducted by Competition Commission of India has found as many as 20 companies engaged in anti-competitive agreements and price-fixing in the eastern and southern regions of the country.
Sources have told CNBC TV-18 that ACC Limited, UltraTech Cement, Dalmia Cement, Shree Cement, NUVOCO Vistas Corp and Ambuja, along with manufacturers' association have sought more time from CCI to file their reply on alleged cartelisation.
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