Is It a Good Time to Invest in Cement Stocks in India?

ultra tech cement share price

Cement sector in the stock market is booming

In the past two weeks, market watchers observed some significant changes in the commodity sector. Commodity stock prices are increasing, and the commodity index is booming. Cement stocks are performing extremely well, and industry stalwarts have recommended a “strong buy” for cement stocks. The Nifty Commodity Index commonly known as NIFTYCOM is trading at 5,749.95 as on 19th May 2023 which is 0.65% higher than last year. Hence, indeed it is the right time to invest in cement stocks. Keep a close watch on the sectors and invest in the most-profitable stocks as per the analysts’ suggestions. 

What is the reason for this rise?

Internationally, petroleum coke prices have reduced by 50% from the peak levels, a month-on-month fall by 10%. The cement industry in India has benefitted from this trend. Experts predict this will impact positively the EBITDA per tonne in the first half of the financial year. Four cement stocks gaining the most out of this trend are Ultratech Cement,JK Cement, Shree Cement, and JK Lakshmi Cement. However, as the monsoon season hits, there’s likely to be lesser demand in the market. 

Top Picks to Invest in Cement

Ultratech Cement and Shree Cement are the top two picks by market analysts in this scenario. As of 19th May, ultra tech cement share price was at INR 7681.30. Experts suggest a “strong buy” with a target price range between INR 8600 to INR 8900. The Net Profit of Ultratech Cement has increased by 42% in the last 3 years and it has seen a healthy growth of 20% in sales growth in the last 4 quarters. The financial track record has been very good with a fair valuation. This makes Ultratech a good investment option especially for short-term traders.  

ACC Cement – a Good Buy

ACC Cement is another stock in the cement sector to watch out for. Most analysts have recommended a “Buy” for ACC Cement. The primary reason being the stock prices are less volatile than other contenders in the cement industry with 4% volatility in the last 3 months. As the stock is less volatile it means the investors have lower risks to incur huge losses in the longterm. If you want to benefit from intraday trading, this little volatility can work your way. acc share price was at INR 1729 as of 19th May with an intraday peak at INR 1740.88. However, the stock is on the verge of making corrections with consistent fall in prices with the highest price at INR 1805 on 12th May over a 1-month period. 

How are the other sectors affected?

As the pet-coke prices fall, the petroleum stocks in the domestic front are bearing the brunt of it. RIL has dipped by 35% of its peak levels and is trading at 14,000 levels in May. Other energy stocks have also been impacted and the overall NIFTY Energy index is low with expected corrections in June. 

Make informed decisions

The market fluctuations and performance of stocks are based on multiple factors. Make your investment decision based on detailed information and experience. Consider the recommendations made by the experts as a reference but make your decision wisely.  

By Clare Louise
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