Kakatiya Cement Sugar & Industries Ltd, (KCSI), Shiva Cement Ltd and Deccan Cements Ltd are the three stocks that have gained more than 100 per cent over a one-year time frame.

Markets have performed well over the past one year, with the Sensex delivering approximately 2.90 per cent over a one-year period and almost 7.50 per cent on a YTD basis.

Even as broader markets struggled to gain in double digits, three cement stocks have more than doubled over a one-year time frame. Kakatiya Cement Sugar & Industries Ltd (KCSI), Shiva Cement Ltd and Deccan Cements Ltd are the three stocks that have gained more than 100 per cent over one year.

From October 2015 to October 2016, KCSI gained almost 226 per cent, Shiva Cement Ltd rose by 147 per cent and Deccan Cement went up by 128 per cent.

The other cement stocks that did well by generating more than 50 per cent returns over one year are Shree Digvijay Cement Company Ltd, Ramco Industries Ltd, OCL India Ltd, Burnpur Cement Ltd, Sainik Finance & Industries Ltd, Century Textiles & Industries Ltd, Heidelberg Cement India Ltd, Mangalam Cement Ltd and Barak Cement Ltd.

Input costs weigh on UltraTech’s Q2 show
The impact of hardening costs was visible in UltraTech’s profitability during the September quarter and that might have disappointed some on the Street. Coal costs have been on the rise and so have been petroleum coke (pet coke) prices, which have more than doubled in six months.

Support came from stable cement realisations, though it was a seasonally weak quarter for those in this segment, due to the monsoon. The average all-India price of a 50-kg bag at Rs 300 was flat compared to Rs 299 in the June quarter and Rs 296 in the previous year. Cement volumes at 11.2 million tonnes (MT) were a shade higher than the 11.1 MT in the year-before quarter, but lower than the 13.2 MT in the previous one. This, too, might have disappointed some analysts.

Overall, costs per tonne at Rs 3,851 increased 6 per cent sequentially (but 7 per cent lower than the year-ago quarter). Positively, the company’s pet coke usage at 71 per cent rose 2 per cent sequentially and 15 per cent year-on-year. Pet coke prices are 10-15 per cent less than those of imported coal and, hence, the increase in pet coke usage is beneficial.

UltraTech is also working on waste heat recovery systems (WHRS). The WHRS power share at 7 per cent rose 3 per cent over a year before and 1 per cent sequentially. These helped keep overall costs in check. UltraTech said efficiency improvement contri-buted a third of cost improvement.

Hence, EBITDA margins at Rs 1,378 crore (up 16 per cent over a year) was slightly lower than the Rs 1,394 crore in the Bloomberg estimate. Net profit (up 25 per cent year-on-year) at Rs 614 crore, was way lower than consensus estimates of Rs 701 crore. The stock has exhibited a 55 per cent rally over the past nine months. Moving forward, though, the prospects remain strong. Analysts believe demand is likely to grow and help realisations in the second half of FY17.

After the October price rises, better realisation would help mitigate rising fuel prices.

Cement demand likely to grow by 8% in FY18: JK Cement
Helped by the government’s push in the infrastructure sector, cement demand in the country is expected to touch 8 per cent in 2017-18 fiscal, a top official from JK Cement said in October 2016.

"The sector is looking up, and with projects in housing, roads and bridges taking off, we expect demand to hit 7 per cent in this fiscal and 8 per cent in 2017-18," JK Cement Chief Financial Officer A K Saraogi told reporters.

Sharing similar views, JK Cement Special Executive Madhavkrishna Singhania said the demand this fiscal will be supported by good monsoons, which is likely to boost spending especially in rural areas.

"For the last one-two years, cement demand was almost muted, but in the next two-three years, we will witness several projects in the infrastructure space taking off, which will drive demand," he added.

According to ratings agency ICRA, cement demand is likely to grow by 6 per cent in the current fiscal and further rise to 7 per cent in 2017-18, on improvement in the infrastructure segment, from the relatively muted 5 per cent in 2015-16.

When asked about prices, Saraogi said that operating costs have risen on account of higher pet coke and other raw material rates. "The companies will have to pass on the rise to the consumers, but the decision will be market driven," he added.