GOLDEN RULES FOR TRADING

Cement Stocks Outlook for the week – 13 to 17.10.2014

Cement Stocks Outlook for the week – 13 to 17.10.2014

Stocks of major cement companies are likely to trade in the green next week on optimism of a
pick-up in demand with monsoon rains having receded. Also, there are high expectations that
Jul-Sep will be a stable quarter for cement companies in terms of volume uptick and operating
margins.

Industry volume growth is expected to remain steady at 6-7% during Q2 (Jul-Sep)(vs 8-9% YoY
in Q1), benefiting from improving business sentiment and lower rainfall (YoY). There was a
seasonal fall in average cement prices in across the country, except in south India, where prices
declined only marginally.

However, cement companies managed to arrest the sharp correction in prices despite monsoon
regaining momentum in the latter part of September. We expect the sustained volume revival to
continue supporting realisations and maintain a positive outlook for the sector.

We continue to prefer UltraTech in the large cap space. Among midcaps, we like JK Cement, JK
Lakshmi & Heidelberg Cement due to their presence in strong regions and well timed expansions, while India Cement can be a major beneficiary of a strong demand.