Analysts maintain positive outlook on cement sector

Analysts maintain positive outlook on cement sector

After reviewing the situation post the Competition Commission of India (CCI) order of slapping a Rs 6000 crore penalty on cement majors for cartelisation, analysts are maintaining a positive outlook on cement sector because there will not be an immediate drag on the respective company balance sheets due to the ongoing tussle between the CCI and the cement makers.
CCI in its order said the penalty would be at the rate of 0.5 times of profit earned during FY10 and FY11. Despite the 'unfavourable order' passed by the CCI, brokerages are bullish on sector stocks.
Cement company stocks are on an uptrend despite the CCI's penalty order. Analysts say, sector stocks are likely to see a correction as companies have left the CCI order overhang partly behind by deciding to contest the order.
Cement stocks of companies like ACC, Ambuja Cements, JK Cements and UltraTech, Madras Cements and JP Associates declined anything 3-5 per cent following the CCI order in the last week of June. However, since then, stocks have recovered from losses they made and are now in green.

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