Why Cements Stock Ultratech Cement, Ambuja Cements Gained Today?

On December 11, 2024, Ultratech Cement’s shares surged over 2%, reaching an intraday high of ₹12,057.50, after opening at ₹11,863.15. This gain came in the wake of incremental price hikes taken by cement dealers, following a period of flat margins for 4-5 months, which had previously hurt dealer profitability.

Dealers attribute the price hikes to stronger demand from the real estate sector, buoyed by improved labour availability after the festive season, as well as an uptick in orders from the infrastructure sector.

By 9:25 AM, Ultratech Cement shares were trading at ₹12,028.80, up 2.4%. Shares of Adani group cement companies, ACC and Ambuja Cements, also saw gains, rising 1.86% to ₹2,290.25 and 1.27% to ₹580.80, respectively. Dalmia Bharat was up 2.1%, trading at ₹1,938 per share.

Estimates suggest a potential 4% price hike in H2FY25, driven by a strong volume recovery and cost reductions, aided by operating leverage.

Cement Industry Growth in India

India is the second-largest producer of cement in the world. It accounts for more than 8% of the global installed capacity. The cement sector saw a modest growth of 2-3% in Q1FY25, primarily due to a slowdown in construction during the Lok Sabha elections. For FY2024-25, a growth of 7-8% is expected on the back of strong demand for infrastructure and housing.

The consumption of cement in India is expected to grow at a CAGR of 5.68% from FY16 to FY22. India’s cement industry plans to increase its capacity by 150-160 MT between FY25 and FY28, building upon the 119 MT annual capacity addition over the last 5 years, to cater to growing infrastructure and housing demands.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.