Cement is a binder that holds all other concrete components together, creating the strongest foundation in the construction industry. It seems that the construction industry’s stocks are also falling.
What does this mean? We have all the answers you need.
The cement industry is shivering due to the continuous fall in stock levels. Below are some of the reasons behind this.
Understanding the Cement Sector
The cement industry’s inefficient supply chain is constantly under scrutiny for its lack of R&D and subpar technology. It also fails to explore new technologies. The last one can streamline the supply chain, making operations more cost-effective.
Cement stocks have plummeted, causing the industry to suffer massive losses and price drops.
Jesse Lauriston Livermore once said: “The stock exchange is never obvious.” The current cement stocks are designed to deceive most people most of the time.
The Indian government strives to maintain economic growth and stability. The Indian government has imposed a number of new rules and regulations that have increased compliance risks for the cement industry.
All of these factors have caused the equity prices for the Indian Cement Companies to drop dramatically. This blog explains the reasons behind the steep fall in cement stock prices. Let’s look at the reasons why cement stocks have fallen.
Cement stocks: Why are they falling?
In recent months, cement shares have fallen due to declining demand. The main reason is the slowdown of the construction industry.
Cement is used extensively in the construction industry. The oversupply on the market also has pressured prices and led to a decrease in cement stocks.
Below are some of the reasons for the decrease in cement stock.
Infrastructure development is not spending enough
The recent decline in cement stocks can be attributed to the slowdown of infrastructure development. The slowdown in infrastructure is due to a number of factors.
The first is the lack of government spending. The government has been reluctant to spend more on infrastructure because of the fiscal situation. This has caused a slowdown in construction projects.
A lack of private investments is another reason. Due to the high costs and risks involved, private companies are hesitant to invest in infrastructure projects. This has contributed to the slowdown in infrastructure, resulting in a reduction in cement stocks.
This trend is likely to continue until infrastructure spending increases.
High fuel costs
The high cost of fuel is causing a decline in cement stocks. In recent months, the costs have increased dramatically. This has put pressure on margins and led to a drop in stock prices. The strong US dollar also makes cement exports more expensive and further reduces profits.
The new Earnings Per Share (EPS), which is a result of the recent earnings per share, is
The cement industry’s stocks have been on the decline in recent months, and one of the key reasons cited has been the new Earning Per Share (EPS) method. This method is based on a different set of accounting standards and results in lower reported profits for many companies.
The decline in EPS has also been linked to Ambuja Cement’s weak Q3 report. The cement shares have been affected by this fact.
Launch of the CAPEX Plan
UltraTech Cement, one of the biggest cement companies in the world, announced that it would launch a CAPEX program with a value of 129 billion. The working capital has also been affected by the falling cash flow.
P/E ratio evaluation
The P/E ratio for Ambuja Cement, on the other hand, is also relatively high. This could indicate that the stock is overvalued. Ambuja Cement has seen its sales and profits decline due to this aspect, as well as the declining demand for cement.
The company’s raw material supply has also been a problem, increasing production costs. Ambuja’s cement market share has fallen between 3% and 10 % for these reasons.
Ambuja Cement, as one of the world’s leading cement companies, is a key statistic when evaluating cement stock.
Ultratech cement shares also fell in price. Ultratech has focused on cutting expenses to cover its loss. This is expected to increase stock prices significantly over time.