Cement stocks on fire on price hike reports

Shares of cement majors like ACC, Ambuja Cement, UltraTech, India Cement and others surged amid reports that cement prices in South India have risen by Rs25 to Rs40 per 50-kg bag. Cement prices (gross retail) have risen by Rs15-20/bag in Hyderabad with effect from 7th September, according to reports. The revised prices in Hyderabad stand at Rs165-170/bag as versus Rs145-150/bag the previous week. Cement prices in other regions in the South (Tamil Nadu and Karnataka) have also risen by Rs5-7/bag with effect. The ruling price in Karnataka and Tamil Nadu stands at Rs195-200/bag as against Rs175-180/bag in the previous week. In its reaction to the news, IIFL today said in a note to its clients that the development seems like the south based players are taking a conscious effort to shore up the prices in spite of new supplies hitting the market. It called the move as sort of a quasi cartelisation. "However, our earnings estimate still remains unchanged in spite of this price hike as the fall in price this year has been much sharper than expected (30% in last one year in Southern region)," IIFL said.