Only long-term investors should look at cement sector: ICICI Direct

In a chat with ET Now, Pankaj Pandey, Head Of Research, ICICI Direct, shares his views on the outlook of the cement space.

The latest dispatch numbers in the cement space show that volume momentum clearly seems quite comfortable, pricing power seems to be getting back to cement makers now with the kind of recent price upticks. Is there any call that you would have on any stock?

We are not expecting any great set of numbers from the cement sector for the next 1 or 2 quarters. We have seen about 5% volume growth; however, we are not really bullish on the kind of price hikes that the companies have undertaken. We feel that may not really sustain going forward, especially in some of the markets like South India. However, from a valuation perspective if you look at the midcap counters like JK Cement or JK Lakshmi Cement were focused on the north side. They are trading about 40-50% below their replacement cost. So, if somebody has a slightly longer term horizon in terms of 1-2 years, cement can be looked at but if somebody is there for short term, say, 2-3 months, they should avoid cement.