EXCLUSIVE! - Asian Market Securities - Sector Update - Cement

Indian Cement Industry

Asian Markets Securities, in a sector update on cement, said valuations are at a reasonable level, and "the best has already been factored in the prices, and long-term outlook does not appear rosy."

The report added: "At best, cement sector could be market performer offering 10-15% return in sync with market momentum over the medium term. Valuation gap within the industry will widen as companies will get divergent valuations based upon factors like location, efficiency, financials, scale, cap-ex plans etc.

"Our word of caution also stems from high enterprise value (EV), which over the past one year has sky-rocketed to $200-220 per tonne for large companies & $150-170 per tonne for mid-sized companies.

"Such astronomical pricing is peculiar to boom times & tend to correct sharply should cycle turn unfavorable.

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