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ACC’s Volume Growth Spurs A Rally In Cement Stocks

Cement maker said adverse effect of demonetisation had waned. 

An advertisement for ACC Ltd. cement is displayed on a Calcutta Tramways Company Ltd. (CTC) tram in Kolkata. (Photographer: Sanjit Das/Bloomberg)
An advertisement for ACC Ltd. cement is displayed on a Calcutta Tramways Company Ltd. (CTC) tram in Kolkata. (Photographer: Sanjit Das/Bloomberg)

Cement stocks were among of the biggest gainers on Monday, after pan-India player ACC Ltd. reported a good volume growth in the January to March quarter on Friday. The company attributed the four percent year-on-year jump to the waning impact of demonetisation and expanded capacities at Jamul and Sindri facilities.

South India-based cement maker India Cements Ltd. was the biggest intraday gainer on the back of the stock being removed from the futures and options (F&O) ban list.

ACC’s sales volumes stood at 6.6 million tonnes in the three months ended March, recording a 4 percent growth yoy and 21 percent growth quarter-on-quarter.

ACC’s net profit fell nearly 10 percent in the first three months of the calendar year, its third straight quarterly decline, but managed to beat estimates on account of higher sales volume.

Shares of the cement maker rose as much as 7.44 percent to Rs 1,606.75, highest since October 26.

UltraTech Cement Ltd., which is expected to announce its earnings on Monday, was trading more than 3 percent higher.

ACC’s Volume Growth Spurs A Rally In Cement Stocks

Lower raw material prices and an overall recovery in pan-India demand is fuelling the rally, said Hemant Nahata, research analyst at India Infoline Wealth Management Ltd.

Key metric for the cement sector i.e. realisations has started normalising mainly on account of pent-up demand post demonetisation period, price hike in most regions, barring couple of places in south India. Besides, receding prices of pet-coke also is positive for the sector.
Hemant Nahata, Research Analyst, IIFL Wealth Management