Cement manufacturers have had a dream run, both on the bourses as well as in sales realisation across the industry. The trend is of cost-cutting and gearing reduction; thus, boosting margins for cement players. The demand is expected to accelerate in FY22 onwards for the sector, which will further boost utilisation and pricing power.
Gujarat Ambuja has emerged as one of the top performing players in the cement sector.
Here are three major reasons why the stock should be on your favourite list:
1. Best volumes and margins in Q4FY21 :- Ambuja Cements along with UltraTech Cement reflected the best performance, both in terms of volume and margins. Ambuja Cements also reported leaner working capital; thus, reducing the gearing. This was seen with almost all cement companies. Outperformance in volumes and margins is getting reflected in the stock price momentum.
2. High dividend yield:- High dividends are like instant gratification for investors. Trading at Rs 340.85 per share, the stock is reflecting a mouth-watering dividend yield of about 5.28 per cent. The stock is up by nearly 80 per cent in one year and by almost 36 per cent in 2021, so far.
3. Rerating of cement Industry: - The cement industry has been seeing valuation rerating over the past 4-5 years, mainly owing to robust earnings & outlook. With the rerating in motion for the cement companies like Ambuja Cements that are delivering on growth and also aided by strong margins & balance sheet, stands to gain substantially.