Sensex Holds 32,000-Mark; FMCG Stocks Gain The Most -

Sensex Holds 32,000-Mark; FMCG Stocks Gain The Most

Jul 13, 2017Jeremy ParkinsonFinance0

After opening the day on a strong note, the share markets in India continued to witness buying interest. Barring PSU stocks, oil & gas stocks and metal stocks, all sectoral indices are trading in green, with stocks in the FMCG sector & capital goods sector leading the gains.

The BSE Sensex is trading higher by 237 points (up 0.7%) while the NSE Nifty is trading higher by 63 points (up 0.6%). The BSE Mid Cap index and BSE Small Cap index are trading up by 0.3% & 0.4% respectively. Gold prices, per 10 grams, are trading at Rs 27,914 levels. Silver price, per kilogram is trading at Rs 36,973 levels. Crude oil is trading at Rs 2,924 per barrel. The rupee is trading at 64.50 to the US$.

Cement stocks are trading on a mixed note with Birla Corp and Heidelberg Cement leading the gains. As per an article in the Livemint, average cement prices are expected to rise by 6% year-on-year (YoY) and 7% on quarter-on-quarter (QoQ) basis across the country despite volume decline in the southern and central regions.

As per the report, the raw material cost is also likely to go up this year. Total costs per tonne are expected to be up by 7% YoY led by price increase in pet coke, diesel, slag and packing material, among others.

With the onset of monsoon, volume flow and prices are likely to remain muted.

The cement volumes in the southern and central regions are likely to be down YoY, owing to weak off-take in Tamil Nadu due to political matters and Uttar Pradesh, where sand mining issue continue to impact off-take. Volumes in the eastern region are likely to grow sharply by 20% YoY, led by strong demand in Bihar, Jharkhand and Odisha.

And if one were to go by the numbers as reported by Business Standard, the valuations of the Indian cement companies are obscenely expensive.

Globally, cement makers are valued at 26x their latest annual earnings and 1.6x times their latest book value. The corresponding ratio for Chinese players is 23x and 0.95x respectively. On the other hand, Indian cement makers are valued at 48 times their net profit in the last financial year.