Cement sector set to bounce back

Cement sector set to bounce back

Deven Choksey, MD at KR Choksey Shares and Securities, feels that considering the number of project clearances granted already, when these projects get into the commissioning mode, infrastructure activity would begin in earnest. He says that cement falls in that particular bracket and stands most to be benefited. This will definitely be reflected as bounce- backs in stock prices. "More importantly, you are also seeing a consolidation happening in this particular space. We saw the JP transaction taking place. We are now talking about the Sagar Cement transaction which is taking place in Andhra Pradesh.

So, from all perspectives you probably will find that having consolidated the capacities in a few hands, they may assume higher amount of pricing power, going forward. That is another reason for which the buying has also started happening into commodities like cement," he said. He also added, "To my mind, they are not extensively traded even at this point of time and they hold a lot of potential particularly the capacity utilisation which will start increasing; they also have the advantage of higher capacity production and at the same time, pricing power. I think overall, cement looks to outperform, going forward as well.

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