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    Policy continuity to help infrastructure; 5 mid & smallcap cement stocks with upside potential of up to 35%

    Synopsis

    It is well known that besides giving policy push to the manufacturing sector as a whole, there is another priority list of the government, that is building physical infrastructure like highways, ports and airports. Binding all the infrastructure projects, whether big or small are two commodities, cement and steel along with the knowledge of engineering. While steel is a global commodity, prices are more determined by global moves. However in case of cement the prices are driven by domestic demand and supply dynamics and input costs matrix. In the last two months, the way companies were able to inch up their prices is clear indications that demand is stronger. It is very likely that cement as a sector which has traded not at every high valuations might see a re-rating especially in mid and small cap space.

    In the first phase of its upward movement, strong demand, pricing discipline in part of the country and ability to raise prices as soon as the seasonal factor of monsoon got over brought back the focus on cement stocks. The recent phase has been driven by the fact that after the state election results there is more certainty on policy focus would remain on infrastructure. A word which encompasses everything. Right from building a new airport, a
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    The Economic Times