JK Cement share price recovered today from its down movement last week. It soared above 5 per cent intraday on the National Stock Exchange (NSE). Around 60–65 per cent of cement demand comes from individual housing which is equally split between the rural and urban markets. Rural demand, which is dependent on agriculture and allied activities, is estimated to be unaffected by demonetization (30 per cent). Another 25 per cent demand from infrastructure and industrial capex would also remain unaffected. Thus it is 30 per cent of urban and semi-urban housing demand along with another 15 per cent demand from organized real estate (45 per cent in all) which could be affected by the demonetization move.
While 23rd of these transactions are currently in white, the remaining that accounts for 15 per cent of the overall demand is estimated to be vulnerable to crackdown on black money.
With uncertainty looming large over the long term impact of curbs on black money on the cement sector, the investors have turned bearish. The cement stocks have fallen anywhere from ’13 to 28’ per cent in the past one month. JK Cement share price is trading well above 5.5 per cent currently and it is a multibagger stock as identified by the Dynamic Levels Research Analysts. The stock has strong fundamentals and as predicted by Dynamic Levels last week it has recovered massively.
While the demonetization could have a long term impact on cement demand, its impact on the economic recovery is to delay it by 5–6 months, at worst, as per market experts.
So, those investing with the expectation of a cyclical upturn in the cement sector still have reasons to stay put. Also, with some of the stocks shedding their flab, there were opportunities to buy stocks at reasonable valuations against the past.