All-India cement demand grew at its fastest pace in November on the back of strong demand from infrastructure sector and Central Govt sponsored affordable housing program. Recent data points suggest sharp uptick in sanctions across the categories in Govt’s Credit Linked Subsidy Scheme (CLSS), especially in Tier-II/III cities.
However, housing demand remained sluggish in Tier-I cities but it is being offset by elevated Govt spending on infrastructure and better housing demand in Tier-II/III cities. We remain upbeat on demand given the strong traction in infrastructure and housing sector. Despite strength in demand, the same is not visible in prices primarily due to intense competition for market share, which is usual in initial months of upcycle. We strongly believe that sector would regain the pricing power in FY19 underpinned by improved visibility and better quality of demand. We continue to like JK Lakshmi cement (JKLC), Heidelberg cement (HEIM) and ACC on the back of attractive valuations and strong earnings outlook.
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