Cement Stocks Surge as Ambuja Cement Outperforms with 4% rise

As per CRISIL Ratings, the expectations of profitability are likely to improve in the fiscal year 2023-24, owing to the ease in coal and pet coke prices. There is better operational efficiency and enhanced synergies between Ambuja Cements and ACC along with the other group companies, the rating agency said. 

On Tuesday, the shares of Cement manufacturing companies were in focus despite muted sentiment in the market, thanks to the positive outlook of the industry. The Cement giant UltraTech Cement marked a fresh 52-week high level on the bourses, while shares of Ambuja Cement rose 4% intraday to hit the day‘s high of Rs 457.50 on NSE. Stocks like ACC, JK Cement, Orient Cement, Heidelberg Cement India, and Star Cement surged around 2% during Tuesday’s trade. Meanwhile, NSE Nifty 50 index is down 0.21% to trade around 18,550 levels. 

The management of the cement companies is optimistic regarding the growth outlook and infrastructure in India. With Government’s proactive push towards infrastructure, more opportunity is likely to be explored along with enhanced economic growth. The cement demand is likely to pick up amidst increased spending on infrastructure development, roads, and other projects, as announced in the recent Union Budget. 

The strong presence of the Adani Group in coal, power and logistics verticals will result in a structural reduction in the cost of cement manufacturing, thanks to synergy benefits strengthening the business risk profile. The financial risk profile of Ambuja Cements is likely to remain strong over the medium term supported by robust liquidity, Crisil Ratings said in rationale. Ambuja Cements currently trades at the highest levels since January 2023.

Above-average volumes were witnessed during Tuesday’s trading session as good buying interest pushed stocks higher. Meanwhile, S&P BSE Sensex is down 200 points intraday on Tuesday.