ACC was the subject of buying ahead of its results slated for late afternnon on Friday as marketmen reckoned demand for cement has proved buoyant.
In fact, early trades saw the scrip of the largest cement maker edge up 0.38% to Rs 158.15 on BSE. The scrip had hit a high of Rs 160 and a low of Rs 157, earlier. Around 31,600 ACC shares were traded on BSE barely minutes since trading commenced.
The stock has been on the rise since a late-October 2002 low following expectations over an open offer emanating. Sebi is currently investigating an acquisition of the Tatas' 14.45% stake by Gujarat Ambuja Cement that took place three years back.
From a low of Rs 130.30 on 28 October 2002, ACC surged 26.5% to Rs 164.90 on 2 January 2003. The scrip, subsequently, shed some of those gains. Speculators are reported to have turned active in some cement scrips even though cement prices continue to remain weak. Recent reports stated that cement prices have slipped by Rs 5-10 in Mumbai and by Rs 5-7 in north India per 50-kg bag .
As for the results, a capitalmarket.com poll projects net profit in the range of Rs 20.5 crore and Rs 40 crore for DQ 2002 as against a net profit of Rs 16.93 crore in DQ 2001, a rise of 20.5% to 135.2%. Analysts estimate the company's sales at between Rs 694 crore (Rs 6.94 billion) and Rs 734 crore (Rs 7.34 billion) for DQ 2002 as against sales of Rs 703.86 crore (Rs 7.03 billion) in DQ 2001, a change of negative 1.4% to positive 4.3%.
According to cement analysts, although demand for cement is expected to rise following a slew of infrastructure projects being taken on by the Centre, cement production needs to be curtailed before a rise in prices can be effected and profitability of companies in the sector improved. Firm cement prices are vital for the industry. Analysts feel that, for another two to three quarters, cement companies may not come out with any fire-crackers at least where results are concerned.
The cement supply overhang is expected to continue. This month, Sanghi Industries was expected to commence cement production, but the company has postponed that till March 2003. If Sanghi Industries begins production, cement supply could prove in excess for at least another three quarters.
In December 2002, the cement industry registered a 13.9% rise in dispatches to 9.51 million tonnes from 8.35 million tonnes in the same month a year earlier. Production rose by 17.6% to 9.69 million tonnes from 8.24 million tonnes a year ago.
A few months earlier, the Securities Appellate Tribunal ordered the Securities Exchange and Board of India to take a re-look at the deal involving GACL acquiring the Tatas' 14.45% stake in cement major ACC (that took place three years ago).
SAT has asked Sebi to look into whether the acquisition of stake resulted in change in control or not. If Sebi comes to the conclusion that GACL had, in fact, acquired management control over ACC, GACL would have to make an open offer at Rs 370 per equity share plus interest for the last three years.
BSE Code: 500410
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