Why Shiva Cement Share Price is Rising

India's cement industry has witnessed robust growth, fuelled by a booming construction sector and infrastructure development initiatives.

This growth has translated into increased demand for cement, benefiting cement manufacturers across the country.

A small cement company - Shiva Cement - has gained investor attention recently. In the past five days its share price rallied 16.3%.

Shiva Cement is a subsidiary of the JSW Group, has emerged as a prominent player in the Indian cement market. The company operates cement plants in various regions, catering to both the domestic and export markets.

The recent surge in Shiva Cement share price can be attributed to the positive sentiment surrounding its parent company, JSW Cement.

The parent company's filing of a draft red herring prospectus (DRHP) for its initial public offering (IPO) has infused optimism into the entire group, including Shiva Cement.

Let's take a detailed look the JSW Cement's public offering.

Parent Company's IPO

JSW Cement, part of Sajjan Jindal's JSW Group, has made a strategic move by filing a draft red herring prospectus with SEBI to raise Rs 4 billion (bn) through an IPO.

This includes a fresh equity sale worth Rs 2 bn and an offer for sale (OFS) of Rs 2 bn. The OFS involves AP Asia Opportunistic Holdings, Synergy Metals, and State Bank of India offloading part of their stakes.

The IPO allocates 50% for qualified institutional buyers, 15% for non-institutional investors, and 35% for retail investors. The funds raised will be used to finance a new cement unit in Nagaur, Rajasthan, repay debt, and cover other corporate expenses.

JSW Cement is focused on producing green cementitious products, such as blended cement, portland composite cement, and ground granulated blast furnace slag (GGBS).

The company also manufactures ordinary portland cement, clinker, and related products like ready-mix concrete (RMC), screened slag, construction chemicals, and waterproofing compounds.

The industrial and commercial building sectors are expected to grow at a CAGR of 6-7% from FY24 to FY29. Additionally, Indian cement demand is projected to grow at a CAGR of 6.5-7.5% during the same period, driving demand for JSW Cement's products.

In FY24, JSW Cement's revenue from operations rose to Rs 6.0 bn from Rs 5.8 bn the previous year. However, net profit declined to Rs 62 crore from Rs 104 crore a year earlier, leading to a mixed market response.

This development has positively impacted Shiva Cement. Following the news, Shiva Cement's share price is rallying as investors anticipate potential growth and synergy benefits from the parent company's strategic plans.

What Next?

The growing cement sector, driven by increasing infrastructure projects and demand for sustainable construction materials, presents a favorable environment for Shiva Cement's future.

The company is looking to capitalise on the rising demand for blended cement and other cementitious products.

With the parent company's focus on green cementitious products and technological innovation, Shiva Cement is expected to adopt similar strategies to enhance its product offerings and market presence.

The company's alignment with the broader growth plans of JSW Cement will likely support its expansion efforts, including increasing production capacity and exploring new markets.

As the cement sector continues to grow at a healthy rate, Shiva Cement's role in contributing to this growth becomes increasingly important. The company is expected to benefit from the overall sectoral growth, in the coming years.

This growth is likely to drive higher demand for Shiva Cement's products, further strengthening its market position.

In the near future, the company is poised to leverage its relationship with JSW Cement to pursue ambitious growth targets, focusing on expanding its product range and improving operational efficiency.

How Shiva Cement Share Price has Performed Recently

In the past five days, Shiva Cement share price has rallied 16.3%. In the last month, it is up 16.3%.

In 2024, so far its share price has surged 10.5% and it has rallied 26.4% in the last one year.

The stock touched its 52-week high of Rs 60.5 on 13 October 2023 and a 52-week low of Rs 38.7 on 12 April 2024.

About Shiva Cement

Established in Odisha in 1985, Shiva Cement is expanding its capacity to tap into the growing opportunities in the eastern India markets.

With access to abundant raw material reserves, proximity to key markets, and a commitment to sustainable growth, Shiva Cement is well-positioned for future success.

Shiva Cement's manufacturing facility is strategically located at the border of three eastern states: Odisha, Chhattisgarh, and Jharkhand. This location provides easy access to essential raw materials like limestone, clay, laterite, iron fines, slag, gypsum, and fly ash.

The facility is also well-connected to key markets by road and rail, giving the company a competitive advantage as it serves as a feeder to JSW Cement's eastern plants.

Additionally, the facility's proximity to transportation hubs further enhances its efficiency. It is located just 2 km from the state highway connecting Rourkela and Jharsuguda.

The nearest railway stations, Sagra and Sonakhan, are approximately 24 km and 19 km away, respectively, making transportation both cost-effective and time efficient.

For more details, see the Shiva Cement company fact sheet and quarterly results.

For a sector overview, read our cement sector report.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

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