The investor wealth in the Indian cement sector has zoomed
up to nearly Rs 33,000 crore during the past six-month
leading cement corporates like Grasim, Larsen & Toubro,
Gujarat Ambuja, ACC, India Cement, Madras Cement and Shree
Cement alone have added over Rs 20,000 crore to their
market capital as the combined market cap has touched
a massive Rs 31,724.40 crore as against Rs 16,480.70 crore
in June 2003.
rise was actually fuelled by the Grasim-L&T deal after
which a consolidation was expected in the cement sector,
benefiting the cement companies in a big way. In absolute
terms, L&T has created the highest amount of wealth.
market capital of the company has shot up to Rs 12,166.10
crore from Rs 5,954.40 crore. The Grasim market capital
has also moved up from Rs 3,723.60 crore to Rs 8,943.30
crore. Similarly, Gujarat Ambuja has gained with its market
cap at Rs 4,644.20 crore from its June market capital
of Rs 3,010.30 crore.
an analyst with IDBI Capital: "Following the takeover
of L&T's cement division by Grasim in June, the formation
of a cartel among the cement firms had lead to a hike
in prices of the commodity considerably. This has resulted
in increased activities in most of the cement companies."
Baliga of Karvy Consultancy says though the growth in
the cement sector is not great as the mismatch between
demand and supply still exists, the 'cartel strategy'
of the cement players has emerged as a single-point attraction
for the investors.
week, manufacturers in Gujarat had increased cement prices
to Rs 120-125 per bag citing a pick-up in demand. This
comes in the wake of a sharp decline in realisations for
manufacturers, with prices in many pockets in the state
falling to below the Rs 100-per-bag level.
is among the largest cement producing states with a capacity
of around 15 million tonnes. The total cement demand is,
however, only around 6 MT, and the excess output finds
its way to states like Maharashtra, Rajasthan and Kerala.
say the price increase in Gujarat is likely to have an
impact on cement prices in the adjoining states as well.
"We expect this to have a ripple effect on cement
prices in Mumbai as well," says an analyst with UTI