Cement stocks can bind your portfolio for the long run

Indian cement industry has grown at a CAGR of 3.5 % over FY08-FY15 and is expected to grow at 7% over next few years. India is the second largest producer of cement in the world after China. Cement demand in India is expected to increase on account of government’s push to large infrastructure projects, leading to 45 million tonnes of cement requirement in the next three to four years. The housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the total consumption in India. The other major consumers of cement include infrastructure at 13 per cent, commercial construction at 11 per cent and industrial construction at 9 per cent.

There is a rise in demand for cement due to smart cities projects, as also impetus on road and realty segment. All these factors are giving a lift to cement stocks. We have analysed last one-month's performance of 71 cement companies. Out of 71 companies, 26 companies have given returns of more than 1 per cent; and 14 companies have managed returns above 10 per cent. The months from June-July 2016 were fruitful for cement companies, as 4 cement companies gave returns above 35 per cent to 60 per cent. In last one month, cement companies have managed to give a maximum of 24 per cent returns. However, for some companies the stock performance was flattish due to disappointing results; and growth for the quarter turning out to be below expectations.

We have picked up our top five performers of the month on the basis of last one-month's performance.

Our top five performers are: OCL India (24.17%), Shiva Cement (20.10%), Shree Digvijay Cement Company (19.51%), Mangalam Cement (18.81%) and Udaipur Cement Works (13.85%).  Let’s see how the cement sector performs in  the upcoming month.