The Cement Story

calcium silicate hydrates

 

How should one analyze the cement sector? We can talk about Monsoon seasonality (construction slow down period), India’s top producer ranking in the Cement market (after China), correlation with GDP and housing sector (more than 60% of the total consumption), government control with coal and limestone reserves, power supply etc.

The above variables are from the stock market domain but join a global cement conference and the variables acquire another color. The focus shifts to efficiency. The bottom line shifts from seasonalities and earnings to shortage of global slag and the abundant but low quality Chinese granulated slag. The research gets technical with ideas like ‘grinding optimization, ‘electricity’, ‘energy efficiency’, ‘energy audits’, ‘super conditioning’ and how corrosion in a cement plant can cost upto dollar 500,000 per year.

Then there are other non-popular variables which take us from the popular micro intra sector analysis to the macro inter-sector analysis. How are local cement stocks fairing in performance vs. global cement stocks? Should it matter? The Swiss global cement major Holcim owns 30% of Indian cement sector (ACC and Ambuja). What’s the correlation of cement stocks with the Indian realty components? If interest rates drive real estate, economy is inflationary and commodities and fuel drives cement, what is the cement outlook?

The point I am making here is that there will always be more available data (or possibility of generating new data) that analyst(s) and (or) experts can process. Though probability teaches us to dig into a universal urn of multi-colored balls, making a selection and estimating how the urn components looks like, but in reality…..

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Mukul Pal, is a Chartered Market Technician, MBA Finance and a member of the reputed Market Technicians Association (MTA). He has more than a decade of Capital Market experience dealing with derivatives and global assets. He has worked for Bombay Stock  Exchange, multinational Banks and brokerage houses in leading research positions before starting on his own in 2005. He is the President of the MTA Central and Eastern European Chapter.


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