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Costly coal, weak demand hits small cement companies

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There appears to be a dichotomy in the valuations of cement companies by the Street, with stocks of several small- and mid-sized players, such as Saurashtra Cement, Barak Valley Cements and Sanghi Industries, ending the December 8 trade hovering close to their 52-week lows. High price of coal, weak demand have been attributed to the situation.In contrast, strong investor interest has resulted in stocks of leading players such as ACC, Ambuja Cements and Ultratech Cement trading not too far from their 52-week highs. Analysts tracking the sector have highlighted the fact that investors are especially concerned that the tough operating environment for the broader cement sector, has resulted in a rather weak financial performance for these small- and mid-cap cement players over the past few quarters.

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