Indian Equity:7th Oct.16, Consolidation in Cement Industry: After NIRMA purchased Lafarge Shares: C.K.Birla group Orient Cement Buys Two Jaypee Cement Units for Rs.2000Crores

Large Indian Cement players are looking for Multistate Manufacturing & Marketing:
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If Lafarge-Nirma  and Century Ultratech  deals takes place it would increase consolidation of Cement Manufacturing Capacities in Less number of Hands. Would it increase valuation of Cement Shares?
SWOT Analysis:- 

Strengths:- Expected Demand in:-

1. Infrastructure Development  
2. Development of Corridor near Railway Lines
3. Big Gap of Housing Projects.
4. Development of Sm art Cities.
5. Consolidation:- The Cement is a Capital Intensive Industry, for setting it up needs high Investment. The Investment includes Huge Amount of Bank Loans. The Companies not able to meet Bank Repayment dead lines are selling their Plants. Lafarge-Birla AND Jaypee-Ultratech deals in recent past are few examples. 

Opportunities:-

1.  Already increase in prices in Western India.
2. Creation of Additional Manufacturing Capacities is very slow.
3. Expected Heavy   Rainfall which would give momentum to Civil Construction  

Weaknesses:-

1. Capital Intensive requiring very high Capital Investment. 

Threats:-
In immediate future no threat is visible

Companies Recommended

1. PAN India:-Ultratech &ACC
2. Northern India: J.K.Laxmi-Manglam
3. Southern India: Ambuja & Dalmia Bharat

Purchase Cement Shares on every fall.