Hi all,

This is my first post as a member, although i have been tracking this site for quite some time. I am a very slow investor and really need to take my time before been convinced. I don't seem to understand what's going on with the cement sector. The big guns (ACC, Ambuja) have been on a steady plane for a long time even when realty, infra stocks have going through the roof. Is the cement in some kind of a cycle right now?

Thanks.

1. Govt is pressurizing the sector to lower prices. Kind of threats to take over company operations, especially tamil nadu State.
2. In Cold season Labour is costly as well as less workin hours as labours leave early, so there are slow sales.
3. There is a fear what budget might have for Cement sector in Feb.

All above makes a negative sentiment for this sector and thus triggering selling in this sector.

- With Cement still getting costly due to Demand Supply gap
- Govt removal of import restrictions by reducing Duty on cement being not that succesful.
- Budget on Anvil on 29 Feb

Are Cement companies poised to post exceptional returns next year

I again want to discuss with members about
1. Major Indian Cement Companies to look at? Why?
2. Is this sector poised for Growth?
3. Govt. intervention in pricing power? Is this working against their profitabilities?
4. Major Capex plan of major Cement companies, is that going to create over- Supply in future? Thus sector will underperform?

India currently has a cement capacity of around 175 million tonnes.

This is expected to go to 275 million tonnes by the end of FY 2010.

Currently demand and supply are almost in the equilibrium and thus cement companies have the pricing power.

This will change as new capacities become active.

Indian cement consumption has been growing at around 9% annually for the last 5-6 years.

A similar growth is expected in next few years too.

Once the additional capacities become functional, demand will not catch up with supply till FY 2013.

Also, there is a constant pressure by the government to control prices.

Most of the growth in cement consumption will be nullified by weaker prices over the next few years.

I expect cement companies to under-perform the markets till at least mid-2011.

__________________
Read All Rules Before Making Any Post | E-Investing on Google+

Further reading

http://www.equitymaster.com/research...r-info/cement/

As already stated the Indian Cement industry is growing at around 9% and is expected to grow according to me at about 11% in comming 2-3 years because cement being one of prime materials needed to construct infrastructure, and India greatly needs infrastructure. Even considering this rate of growth, as compared to other sectors cement seems to be lazy. So, I am staying away from cement companies unless I get some new data to churn out.

Imposition of dual excise duty on cement in the Union Budget a major dampener. Dual excise duty on cement will only lead to further increase in price of cement.

And on other side govt is trying to control cement prices. This sector is all set to play spoil sport....

Here is a link to undervalued midcap cement stocks.

Link

Only three are mentioned: JK Cement, JK Lakshmi, and Heidelberg.

The cement sector was discussed on CNBC TV18 today.

Companies in North India seem to be doing well, but there are serious oversupply problems in the South.


Source.

No doubt the supply-demand situation is better in North India, but some part of the price difference exists because of short-term factors like demand from Commonwealth games projects and scarcity of wagons.

In the long-term, the price gap between North and South will narrow down.

Till then, north-based companies like Mangalam Cement can enjoy the high prices in the region....

__________________
Read All Rules Before Making Any Post | E-Investing on Google+

I guess the fun is over now.