Stock market and stocks investors should look into the fundamentals of individual scrip before allocating their funds, it was stated by Rafi Khan, Chairman Sawari Private Limited, while talking to AAJ Markets.
He said that due to rising demand as well as supply constraint cement prices are on a surge; ex-mill cement prices are around Rs 310 per bag against cement manufacturers claim of Rs 275-285 and companies are making almost Rs 2000 per tonne profit and that makes the sector attractive for investors. He further added that neither the US nor Europe offers such returns.
Cement manufactures claim that they are not passing higher furnace oil cost to the consumers, Rafi said and added with rejecting their claims that most of the manufactures are operating on coal and coal prices are on a decline by more then 10 percent, but pin-pointed high tax rate on cement sector besides buying by government agencies, during the peak demand season, contributing in the price surge.
He was of the view that the government should diversify its buying for entire year instead of bulk buying during the peak season as it imbalances the classic law of demand and supply.
Rafi Khan said the government has allowed cement import in the country though there is little progress in this regard if government wants to curtail cement price surge they should start importing it. He was of the view that in the current scenario cement prices would remain higher till September-October, as the classic imbalance of demand and supply is in play, and it would continue to lift prices.
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