Cement stocks will continue to do well: Emkay Global Financial Services

Sharmila Joshi, Co-Head PCG Sales, Emkay Global Financial Services in an interview with ET NOW said like sugar, scenario have possibly played out in the cement in the sense that people have already bought into the sector and has gone from being under owned to over owned.

We spoke about the real estate space in particular but the kind of momentum that was are seeing in some of those cement counters is quite significant in just a matter of 10-days we have got a Dalmia Cement and Andhra Cement most of these cementing counters posting double digit gains so in terms of the demand is also picking up and plus the excise duty that has been passed on to consumers is not stopping them from going in and buying it so in that sense is there a future for cement stocks at this point?

I think the story is a little more complicated because I think that as we were talking a little earlier for sugar. Similar scenario has possibly played out in the cement in the sense that people have already bought into the sector and has gone from being under owned to over owned. So, I do agree that pricing power seems to be definitely back with the producers because after almost nine months now we are going to have them raise prices for almost a second or third time in a row and in March 18th is when the next price hike for cement is slated so from that perspective.

Obviously things look strong but we cannot ignore the fact that a huge amount of supply is going to hit us in the first couple of quarters in FY11 and even if we do target a good growth and you will see that growth perhaps its time to relook at this sector and in fact we have downgraded the sector from being overweight to neutrals so that's not a big negative, stocks will continue to do well but just a time to turn a little cautious here.