Positive on cement stocks: Gaurang Shah

In a chat with ET Now, Gaurang Shah, Asst VP, Geojit BNP Paribas Financial Services, shares his views on cement stocks.

ET Now: What is your expectation from cement majors ACC and Ambuja because while seasonally it is expected to be a strong quarter for both of them, everyone is keenly watching out for any adjustments or increment on that royalty payment to Holcim. How do you think this is going to impact the numbers?

Gaurang Shah: Firstly as a disclosure, we do have a positive coverage that recently we have started on three stocks - ACC, Shree Cement and UltraTech. Ambuja, the way it has moved up there could be a little bit of consolidation before you see the next move up.

In terms of numbers, yes, you are going to see some amount of nervousness from purely short term point of view on fall back of that royalty payment that they both Ambuja as ACC will have to make to Holcim but we believe that it could be a very short term negativity.

If I look at the demand consumption, if I look at the pricing power, if I look at the cost which has been quite steady and of course the month on month numbers, there is going to be still more upside.

And in case if the government has to touch upon the reforms in the real estate and infrastructure, definitely your consumption is going to look much more robust than what it is now. The fact that in last three to six months, the cement sector has been actually giving you a fantastic performance, that performance will continue barring some negativities in terms of quarterly numbers and of course those royalty payments and in case if there is some negativity, we will identify it as a buying opportunity.