Deccan Cement shares surge 20% on Wednesday — Key triggers behind the upmove

Shares of Deccan Cement surged 20% on Wednesday, July 16. Not only Deccan, shares of other cement players based out of South India, such as Sagar Cements and NCL Industries, saw a surge of up to 5% as well.Among the key factors at play include the hopes of improved earnings during the June quarter as the southern part of the country saw sharp price hikes. There are also hopes of further consolidation in the industry, with other southern names like Penna Cement and Orient Cement already being acquired.

Deccan Cement has a 4 MTPA capacity out of which expansion on 2.2 MTPA capacity was in the works.

The enterprise value of the company comes up to around ₹2,200 crore, along with capex worth another ₹400 crore.Based on the existing capacity, Deccan Cement’s Enterprise Value comes up to between $70 to $75 per tonne.

Cement companies will also be in focus over the next week as three companies, JK Cement (July 19), UltraTech (July 21) and Dalmia Bharat (July 22) report results.The surge in Deccan has rubbed off on other southern peers like Sagar and NCL, which trade at an Enterprise Value per tonne worth $50 and $45 respectively.

Another south-based company, whose shares have seen a sharp surge on Wednesday, is KCP, whose stock has gained as much as 6%.

The total enterprise value of the company is at ₹2,100, along with a cement capacity of 4.3 MTPA, along with Limestone reserves. KCP Ltd. also holds 67.23% stake in KCP Vietnam Industries, with a capacity of 11,000 Tonnes of Cane per Day (TCD).

KCP’s Cement business’ enterprise value per tonne comes up to $60 per tonne and worth ₹2,150 crore.

Shares of Deccan Cement are trading 20% higher at ₹1,075, while those of Sagar Cements, NCL Industries and KCP are up as much as 6%.