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catcall
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 1076
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   Posted: 23/Feb/2007 at 7:13pm |
My take on the cement sector- I feel that these stocks, expecially the smaller ones are correcting below thier fair valuations. As far as reduction in import duty is concerned, I do not feel it will the effect is more sentimental than fundamental. As regards the export ban, while the larger players do get export revenues, majority of the mid-cap cement companies do not export even today and the growth in revenues is largly due to strong domestic consumption , which even by conservative estimates, will remain storng at least for the nest 5 years.
I expect the downside to continue till atleast the budget, after which these companies should give good entry levels
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There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing!
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PrashantS
Senior Member
Joined: 14/Oct/2006
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Posts: 1294
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Posted: 23/Feb/2007 at 7:39pm |
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i would really not touch cement..though it might be in demand..tough to take a call..the way the good companies are falling...but contrarioan calls may help...chidambaram ji kuch bhi kar sakte hein..or the export ban will be just a rumour...........as long as he downst affect media service ..i think we are all happy
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catcall
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 1076
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Posted: 23/Feb/2007 at 8:06pm |
"I shall be saying this with a sigh,
somewhere ages and ages hence,
two roads divered in a wood and I,
took the one less travelled by,
and that has made all the difference"
- With appologies to Sir Robert Frost!!!
(whether it will be a sigh of angush or relief , only time will tell 
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There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing!
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basant
Admin Group
Joined: 01/Jan/2006
Location: India
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Posts: 18403
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Posted: 28/Feb/2007 at 4:04pm |
The Budget has delivered a stunning blow to the cement industry. The provisions are Rs 12.50 Excise duty if cement is sold at Rs 190 per bag and a duty of Rs 30 per bag if it is sold beyond Rs 190. That means that no seller would sell cement between Rs 190 to Rs 207.50 --- The additional excise duty component of Rs 30 - Rs 12.50 = Rs 17.50 will have to be recovered.
In the short run prices will remain beyond Rs 207.50 but over the next 6 months as incremental supply comes in (aided by increase in capacities and export ban) cement prices could be under pressure. The wioring on the wall is clear if cement manufacturers do not reduce prices the Govt. could act like a police state.
Now this kind of an action is least expected from a Govt. but the point is that blaming the Govt (with reason) will do no good to the losses that investors in this sector have suffered.
As a cascading effect of prices being subjected to further upward revision in the short run the real estate and construction companies were bleeding.
I have always maintained that things that are subject to whims and fancies of the Govt. should best be left to them because the Govt. has an uncanny ability to hit when it matters the most.
Edited by basant - 28/Feb/2007 at 4:37pm
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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BubbleVision
Senior Member
Joined: 05/Aug/2006
Location: India
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Posts: 3142
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Posted: 28/Feb/2007 at 4:14pm |
According to my sources in the Eastern Region.. ACC and Lafarge would have to reduce their prices to take advantage of the lower Duty....
Their margins would fall the most!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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johnnybravo
Senior Member
Joined: 17/Jan/2007
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Posts: 533
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Posted: 28/Feb/2007 at 5:31pm |
Originally posted by basant
I have always maintained that things that are subject to whims and fancies of the Govt. should best be left to them because the Govt. has an uncanny ability to hit when it matters the most.
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Rightly said basantji - the Govt is not even acting like a headmaster...but like a ring master...Power hungry Politicians can screw up the fortunes of any sector. When it comes to 'kissa kursi ka' even the most educated ones appear to be dumb. Here is something Grasim has to say: http://www.moneycontrol.com/india/news/economy/palaniappanchidambaramfinanceminister/cementexcisedut/market/stocks/article/269292
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vip1
Senior Member
Joined: 09/Oct/2006
Location: India
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Posts: 492
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Posted: 28/Feb/2007 at 6:43pm |
It was quite evident , that the Government in its bid to contain Inflation would do what it has done , the Cement price for the last 10-15 years or more was between 100- 150 Rs/ Bag . Cement Companies were bleeding . Only in the last 1 year or so they had got their ricing power back, but poor felows had such a short time to make money.
But the big question is will anyone now invest in Future Capacities ?
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kulman
Senior Member
Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 28/Feb/2007 at 7:17pm |
In a business selling a commodity-type (competitive) product, it's impossible to be a lot smarter than your dumbest competitor.---Warren Buffet
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Life can only be understood backwards—but it must be lived forwards
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