Elevated coal costs and heightened competitors appear to have dampened the investor curiosity in cement shares, at the very least in the interim. Shares of cement makers plunged on Friday after bellwether ExtremelyTech accredited capital expenditure of Rs 12,886 crore to extend manufacturing capability.
While shares of ExtremelyTech Cement plummeted as a lot as 5.5% on Friday to shut at Rs 5,678.85 on the NSE, the inventory of JK Cement slumped 8.4%. Both the shares examined their lowest ranges since January 2021. The inventory of Dalmia Bharat tanked 8.8% to hit its lowest stage since February 5, 2021. While Ramco Cements slumped 9.3% to its two-year low, Shree Cement noticed their shares plunging to the bottom stage since October 2020.
The announcement from the corporate managed by Kumar Mangalam Birla got here two weeks after the Adani Group had entered the enterprise by buying Holcim’s Indian entities – Ambuja Cements and ACC. According to market observers, Adani’s entry is anticipated to additional intensify consolidation within the business attributable to heightened competitors, as massive gamers wish to preserve or improve their market share. “These expansions are meaningful, reinforcing the No. 1 position of UltraTech, and will spur competition in an already overheated supply scenario in the space,” Jefferies wrote in a be aware.
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While the timing of the enlargement shocked some analysts, most of them anticipate the cement shares to underperform within the close to time period, given sustained improve in power prices. “In current times of weak demand, high fuel costs and entry of a new player (Adani group), any significant capacity announcement may be viewed negatively by the market,” home brokerage Emkay Global stated.
According to business consultants, India, the second-largest cement producer on the earth, is anticipated so as to add 150-160 MTPA of manufacturing capability by 2027, because the nation’s per capita consumption stands at 242 kg, a lot beneath the worldwide consumption of 530 kg.
Source: www.financialexpress.com”