www.rupeedesk.in
Stocks of major cement companies are seen taking cues from UltraTech Cement's Jan-Mar earnings that will be announced on Monday. India's largest cement-maker by capacity is likely to post a 14% on year decline in net profit for Jan-Mar at 7.47 bln rupees. The Aditya Birla Group company's net sales are estimated to rise a tepid 4% to 55.61 bln rupees. The market has factored in the likely decline in profits of cement players but there are still fears of higher-than-expected declines, as companies have seen muted demand and weak pricing during Jan-Mar. Investors will also await the earnings of ACC and Ambuja Cements, which are scheduled to be announced on May 3. Profits of cement majors are seen down in Jan-Mar, as the sector was plagued with low demand due to a lull in construction activity, in both real estate and infrastructure sectors. The high interest rate regime has kept home buyers away from the market and has also hit construction companies.
Cement makers' continued efforts to raise prices during Jan-Mar also have failed amid the weak demand scenario. Companies also took a hit as input costs remained steeply up, and there was some increase in prices of diesel that pushed up freight charges. Despite it being a seasonally strong quarter, the earnings growth of the cement companies would be dented due to a sluggish demand environment and the continued cost pressure on the margins. Hence, the cumulative earnings of Sharekhan's cement universe are expected to decline by 13.8% on an annual basis.
