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Gujarat Ambuja Cements hardens
April 01, 2003 17:02 IST
Gujarat Ambuja Cements ruled firm on Tuesday on expectations of strong dispatch figures for March 2003.
The scrip of the cement major was up by 2% at Rs 163 on the BSE in mid-afternoon trades. A modest volume of 65,000 shares was recorded on the counter.
The Gujarat Ambuja Cements stock has come off its higher levels over the last one-and-a-half years. Since the last few months, the stock moved in a band of Rs 150-170.
Tuesday's firmness in the stock was due to hopes that GACL may report strong cement dispatch figures for last month in line with the trend witnessed in recent months. On the back of capacity expansions carried out by GACL, it has notched up an above-average growth in dispatches in the last few months. For February 2003, GACL registered a 44% jump in dispatches to 871,000 tonnes. Its cement production rose by 36% to 856,000 tonnes. For January 2003, GACL's dispatches rose by 23.8% to 847,000 tonnes. For the month of February 2003, the overall cement sector witnessed a 5.92% rise in dispatches to 9.3 million tonnes.
GACL is the most cost-efficient cement maker in the country. It has used innovative ways like sea transport, captive power plants and the utilisation of imported coal to constantly reduce its production costs. It has also been a major player in the export of cement.
GACL got a short in the arm recently when the Securities and Exchange Board of India exonerated the company from charges that it violated the Takeover Code while acquiring a 14.5% stake in ACC from the Tata group. In 1999-2000, GACL had bought the Tata group's entire holding of 14.45% in ACC, in three tranches, at Rs 370 per share.
Meanwhile, analysts said the downside risk for cement scrips is limited since a further fall in cement prices is unlikely. Cement prices witnessed a southward trend in the last few months due to substantial capacity expansions carried out by various cement makers, which created a demand-supply mismatch.
The volume growth continues to decent for the cement sector. For the first eleven months of the fiscal, cement dispatches have risen by 8.99% to 100.3 million tonnes on a production increase of 9.14% to 100.47 million tonnes.
Demand continues to be driven by the Golden Quadrilateral road project and the sustained growth in housing construction activity.
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