Equity Alert: Cement shares down on margin worries; Ambuja slips 6%

[K.Karthik Raja]

Equity Alert: Cement shares down on margin worries; Ambuja slips 6%

MUMBAI--3:09PM--Shares of cement companies were down 2-7% on
worries of
likely further intervention by the government on cement pricing thus
resulting in pressure on already squeezed operating margin, dealers
said.
Among frontline cement shares, ACC, Grasim Industries, Ultratech
Cement,
and India Cements were down 2-3%. Shares Ambuja Cements were worst
hit, down 6%.
The companies' inability to hike prices due to government
intervention
despite rising costs is impacting operating margins significantly as
reflected in recent Jan-Mar earnings.
Recently, cement makers agreed to the government's request to cut
prices
by 3-7 rupees per 50 kg in a few states to bring uniformity in prices
across
the country.
However, Finance Minister P. Chidambaram had then said this price
cut was
not enough and there is still scope for further reduction in cement
prices.
Pause in construction activity from June onwards due to monsoon
will not
allow any improvement in prices, if not deteriorate the pricing scene
further,
analysts said.
Most analysts hold a negative stance on the sector with a view
that
planned capacity expansion will pull cement prices down 10% in the
next 12-18
months.