Share & Stock Broker, Dipan Mehta told reporters, “Cement stock generally has been doing pretty well over the past few months as we have seen. Even numbers have been pretty decent. Apart from the risk that there could be some kind of an investigation into their practices, there have always been charges of monopolistic practices. I think by and large the industry is doing pretty well. These kinds of turmoil which we are seeing in the financial markets and the way the interest rates have moved up, fresh cement capacity over the next two-three years looks bit difficult whether it will actually come through.”

He further added, “Existing manufacturer will be very well placed. Also the way the rupee has depreciated, setting up new cement plants, land acquisition, getting mines would be a very expensive proposition. So, existing cement companies will benefit considerably. I think over the past two-three years we have seen some amount of pricing power coming back to cement companies. I am quite positive on the sector as a whole that as and when we do see uptake in infrastructure as well the real estate industry. I think cement off take could move up further from these levels and pricing also would be quite decent. There is a good chance that they would see topline as well as bottomline growth. By and large I think valuations are in a fairly valued zone. Most of the largecap companies have very healthy balance sheets. They are able to easily carry out their expansions from internal accruals or even manage their working capital from internal accruals.”

“There is hardly any scope for equity dilution over there. So this is one sector I think investors should be looking as seriously to be slightly overweight.”