Shares of Prism Cement rose 8.54 percent to hit an intraday high of Rs 103.50 on the Bombay Stock Exchange (BSE) on Wednesday. This was in response to the company winning bid for securing 18,300 tonnes coal per annum from Southern Eastern Coalfields Ltd., a subsidiary of Coal India Ltd. (CIL).
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The company had informed the BSE about the bid in a regulatory filing after trading hours on Wednesday.
"The company has successfully bid for 18,300 tonnes per annum of coal from South Eastern Coalfields Limited in a recently held auction of coal linkages for the cement industry. The company has secured part fuel requirement for the next 5 years," Prism Cement said.
"This, alongwith the earlier coal linkage of 120,000 tonnes per annum, constitutes about 25 percent of the company's annual fuel requirement," it added.
Other cement stocks were trading with either losses or gains. Ultratech Cement was down 1.06 percent at Rs 3,732, ACC was up 0.52 percent at Rs 1,418 and Ambuja Cement was trading almost flat at Rs 230. Shree Cement shares were up 2 percent to Rs 16,413 apiece. India Cements was down 0.73 percent at Rs 169.
The biggest cement producer in India is Aditya Birla Group company Ultratech Cement, followed by ACC, Shree Cement and Dalmia Bharat.
The cement industry is expected to see capacity utilisation go up in FY2018 to around 70 percent from the 65 percent level in the demonetisation-hit FY2017, according to an update by India Ratings (Ind-Ra).
"Pan-India capacity utilisation remained stable in FY16 at around 70 percent. However, Ind-Ra has revised pan-India capacity utilisation for FY17 to 65 percent from 69-70 percent, due to the weak demand outlook in 2HFY17 on account of demonetisation. Ind-Ra does not expect capacity utilisation to improve significantly in FY18. It is likely to remain around 70 percent during FY18," it said in a note.
The modest uptick in capacity utilisation is being attributed to an increase in demand coming from a revival in infrastructure activities and rural housing, both led by government spending.
Brokerage Motilal Oswal Securities had said a few days ago that cement companies are likely to report weak bottomline for the fourth quarter this fiscal (Q4, FY2017) on account of pricing pressures and rising input costs.
"Profitability for most cement players could be under pressure in 4QFY17 due to rising costs and no meaningful QoQ increase in average realisation, as exit prices of 3QFY17 were meaningfully lower than the average price for the quarter," it said in a note.
India is the second-largest producer of cement in the world, after China.
