With Q2 history against them, cement stocks' valuations looks stretched

Most analysts have a 'sell' or 'reduce' recommendation on the sector

Cement demand is always affected by seasonal considerations since construction is impeded when the weather is poor. In addition, cement production costs are linked to both, the price of raw material, and the cost of power, since it is a power-intensive process. Transport costs are also substantial. The 2022-23 financial year started on a poor note for the sector with soaring prices on the metals, coke & coal and high energy front, hitting cement margins.

However, the first quarter for the 2022-23 financial year (Q1FY23) looked good in comparison to the weak base of Q1FY22 -- since that was affected