Although there has been a favourable change in perception for cement stocks, the impact of this on the Century's stock would not be long lasting. The reason for this is simple. If themarket turns bullish on cement stocks, a majority of players would prefer pure cement stocks like Gujarat Ambuja Cement, ACC, Madras Cement and to some extent Grasim which would become more competitive (in cement sector) after the acquisition of Indian Rayon's cement division. As for Century, the diversification in textiles and especially in paper would continue to affect the market perception. Although the cotton crop has been good, prices have not shown a major decline. But more than the raw material prices, the demand scenario besides increasing competition especially in the denim sector continue to affect profit margins. Also, the paper sector is yet to show sign of recovery. Interest burden will also have its impact on the bottomline. During the second quarter, the interest burden stood at Rs 50 crore. Overall, the short-term outlook is not very favourable.

For Century to become an impressive turnaround case, two factors are required. One is cost reduction and the second is an improvement in demand forcement, paper and textile. While the first one is not difficult to achieve, for the second one to materialise, the economy needs to take a positive turn, which at the moment seems unlikely.

From market point of view, in the case of overall bullish trend which is expected in the coming weeks, Century stock would also continue its uptrend. However, the performance would be below the market average as fundamentals are not in favour of a bull. Hence, a shift to a pure cement stock would be more logical than to holding on to a diversified stock.

Colgate-Palmolive

Colgate-Palmolive announced its first half results during the last week of October. And precisely two days after the announcement of these results, Colgate-Palmolive stock touched Rs 158 and is now up by 20 per cent from this level. This shows that the first half's performance was more than factored in prior to the announcement of the results. During the first half of 1998-99, while the sales dipped by 9.2 per cent, the company recorded adrop of 59.49 per cent in net profit to Rs 17.71 crore. Margins on the operational level dropped significantly from 15 per cent to 7.31 per cent. The uptrend from this level points at two things -- either the stock had overreacted prior to the announcement of results or market is of the opinion that the erosion in Colgate's market share is at least arrested. News reports have also been hinting at the company retaining its overall market share in dental care segment. New launches seem to be paying off. During the second quarter of this year, market expenditure was up by 22 per cent over the first quarter. The stock has been at 3-month high, but whether the uptrend will continue is yet to be seen. According to industry analysts, the company should take an aggressive approach and make investments in marketing and new launches. Such steps are bound to yield positive results in the medium run and would also be favoured by the market.

But if the company is just able to maintain its market share the stock rallywill not sustain as this factor has already been discounted in recent jump in stock prices. For stock to go upward, the company needs to regain its lost market share, which according to analysts, seems unlikely at this stage.