Cement Stocks Outlook for the week – 25 to 29.05.2015

Cement Stocks Outlook for the week – 25 to 29.05.2015
 Seen tracking broader market next week
Cement stocks are seen taking cues from the broader market next week in absence of any major sector-specific trigger. Cement stocks will perform in the way the (broader market) rally is behaving. If the market is going up by 5%, cement stocks will not be able to outperform the broader index. Cement stocks are expected to see recovery in a broader way only after August in anticipation of demand picking up. Demand has not picked up in the current quarter and with the onset of monsoon, a recovery is ruled out.

People will start lapping up cement stocks from August onwards. A long- term sustainable rally will be seen in cement stocks only after August. It will be a range bound trade till August. In large cap cement companies, range will be in terms of enterprise value per tn which is $130 to $160 per tn. Mid cap cement players will continue to trade in the range of $65 to $75 per tn.

The Ramco Cements Ltd and India cements Ltd will detail their earnings on May 29. Stocks of The Ramco Cements and India Cements are likely to perform better next week based on the strong realisation reported by Sagar Cements Ltd yesterday. Sagar Cements reported Jan-Mar net profit at 216.9 mln rupees and net sales at 1.9 bln rupees. Short-term trend outlook for cement stocks is positive while medium trend is negative.