It is well known that besides giving policy push to the manufacturing sector as a whole, there is another priority list of the government, that is building physical infrastructure like highways, ports and airports. Binding all the infrastructure projects, whether big or small are two commodities, cement and steel along with the knowledge of engineering. While steel is a global commodity, prices are more determined by global moves. However in case of cement the prices are driven by domestic demand and supply dynamics and input costs matrix. In the last two months, the way companies were able to inch up their prices is clear indications that demand is stronger. It is very likely that cement as a sector which has traded not at every high valuations might see a re-rating especially in mid and small cap space.
