Cement Stocks Outlook for the week – 07 to 11.08.2017

Cement Stocks Outlook for the week – 07 to 11.08.2017

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Cement Stocks Outlook for the week – 07 to 11.08.2017 )

The shares of cement companies are seen trading mixed next week, with Ambuja Cements Ltd and ACC Ltd expected to gain, while UltraTech Cement Ltd is seen trading in a thin range. Cement prices across the country have declined by 3 rupees per month till now, led by 10 rupees per month decline in western states. The prices normally decline during this period as demand falls due to the monsoon. GST too had an impact as it caused some disruptions. However the disruption caused to the cement sector due to the new indirect tax regime was for a very short term, and things are back to usual now.
A pick-up in housing and prices of petroleum coke will decide the profitability of the cement companies going ahead. Rise in prices of petroleum coke hurt Ramco Cements Ltd and JK Lakshmi Cement Ltd, which announced their Apr-Jun results on Thursday. While Ramco Cements' energy costs went up by more than 30%, JK Lakshmi's energy cost rose over 46% in Apr-Jun. However, petroleum coke prices have declined to $89 per tn in July from $100 a tn in May. We remain positive on the sector in the medium-to-long term as demand is seen improving post-monsoon. Good rains along with government focus on infrastructure and affordable housing are seen boosting demand for cement.

Source : Cogencis Information Services Ltd.