It’s hard to find voices screaming ‘buy’ in the current market and you surely won’t find too many investors shopping for cement stocks. With the slowdown in real estate and other construction activity taking a toll on cement offtake, stock prices of cement companies have been in the dumps. While the worries are for real, stock prices being where they are, should you bottom-fish with an eye on couple of years down the road? After all, if you are bullish on the India story, then infrastructure can’t be ignored and cement companies will benefit.
Going by the valuations at which deals have been struck, cement stocks seem to be trading cheap. Since December last year, there have been three acquisitions with a total capacity of 23 million tonne, the lowest of which happened at an enterprise value of $124 per tonne. Even smaller deals like the acquisition of the one million-tonne BMM Cement by Hyderabad-based Sagar Cement in September 2014 happened at an enterprise value of about $90 million. Today, some companies like Heidelberg Cement, JK Lakshmi, JK Cement and Dalmia Bharat with capacity in the region of 5 million tonne-18 million tonne are trading at an