Gujarat Ambuja Cements held on to its gain on Thursday on the back of the company's strong growth in cement dispatches.

The scrip of the cement major was up slightly by 0.24% at Rs 164.45 on the BSE. But the scrip consolidated its recent gains that was on the back of good cement dispatch figures for the month of March 2003. The scrip has gained 2.9% in the last three sessions - from a recent low of Rs 159.75 on 31 March 2003 to the current Rs 164.45.

The Gujarat Ambuja Cement stock also got a short in the arm recently when the Securities and Exchange Board of India exonerated the company from charges that it violated the Takeover Code while acquiring a 14.5% stake in ACC from the Tata group. In 1999-2000, GACL had bought the Tata group's entire holding of 14.45% in ACC, in three tranches, at Rs 370 per share. The GACL scrip, from a low of Rs 149.40 on 11 March 2003, has surged 10%.

GACL reported a surge in dispatches for March 2003 in line with its recent trend. The company's dispatches rose by 38% to 1.01 million tonnes, while production increased by 41% to 1.02 million tonnes.

On the back of capacity expansions carried out by GACL, it has notched up an above-average growth in dispatches in the last few months. For February 2003, GACL registered a 44% jump in dispatches to 871,000 tonnes. Its cement production rose by 36% to 856,000 tonnes. For January 2003, GACL's dispatches rose by 23.8% to 847,000 tonnes. For the month of February 2003, the overall cement sector witnessed a 5.92% rise in dispatches to 9.3 million tonnes (8.78 million tonnes).

GACL is the most cost-efficient cement maker in the country. It has used innovative ways like sea transport, captive power plants and the utilisation of imported coal to constantly reduce its production costs. It has also been a major player in the export of cement.

Meanwhile, analysts said the downside risk for cement scrips is limited since a further fall in cement prices is unlikely. Cement prices witnessed a southward trend in the last few months due to substantial capacity expansions carried out by various cement makers, which created a demand-supply mismatch.

The volume growth continues to decent for the cement sector. For the first eleven months of the fiscal, cement dispatches have risen by 8.99% to 100.3 million tonnes (92.02 million tonnes) on a production increase of 9.14% to 100.47 million tonnes (92.05 million tonnes).

Demand continues to be driven by the Golden Quadrilateral road project and the sustained growth in housing construction activity.

BSE code: 500425