JK Cement share price falls over 5 per cent intraday on the NSE. Cement dealers in Deoghar in Jharkhand, have seen his business crashing ever since the demonetization drive began on Nov 8. With the buyers running out of cash, absence of card swipe machines and customers not aware of digital transactions. They said that business had come to a grinding halt.
No wonder the cement shares were bleeding on the stock exchanges, slumping by as much as 25 per cent when benchmark indices had lost barely 5 per cent. Regional players JK Cement, JK Lakshmi Cement, India Cements and Heidelberg Cement have cracked 22-25 per cent. Bigger players are less impacted. Ambuja Cements was seen down 18.5 per cent and ACC and UltraTech had seen declines of 13-15 per cent.
Cement stocks have been in focus since the month of April despite one of the best monsoon seasons during construction slows down in several years, cement stocks kept galloping on the back of expectations of demand after the rains. Experts felt that cement was becoming highly overpriced with the market offering 2018-19 premium on these scrips.
In the September quarter (Q2) cement demand growth dipped to 2.5 per cent from 5.5 per cent which was seen in the June quarter and 11.5 per cent in the March quarter. Market analysts estimate the 440 million ton cement industry will end 2016-17 with a growth of 2-2.5 per cent, down as compared to 4.6 per cent in 2015-16.
The profitability and sales of cement companies shall see a substantial downturn in the present quarter, which might also spill over to the March quarter. The effect of a good monsoon normally reflects with a lag of 6 months to a year.
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