Prefer mid caps in cement sector: Pankaj Pandey

In a chat with ET Now, Pankaj Pandey, Head of Research, ICICI Direct (Fundamental Check) talks about ACC and cement outlook.

Just looking at the kind of performance that some of the large caps have given in trade over the last few sessions and one noticeable factor in terms of the kind of earnings that came out was from the cement pack wherein realisations were higher than what was expected earlier and aside of a JP Associates, which has got exposure to infra as well and has taken a brutal beating, some of the others have not really gone down as much, do you like anything in the large-cap cement pack?

From a portfolio perspective, we have ACC in our portfolio but we really do not like any of the large caps in the cement and the fact remains that the kind of results we are seeing in this particular quarter has come in more from the price front rather than the volume front. We would expect or we believe that volume kind of a growth is healthier and more sustainable in the long term rather than the price discipline, which is there existing in some of the markets and that is why in the large caps, we would really not depend to buying these stocks. However mid caps again if you look at, mid caps are trading at substantial discount, so if I have to really play out in the cement sector, I will prefer the mid caps, which are trading at 50-60% discount to their replacement costs, so that is where we would like these stocks.