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Stocks of major cement companies are seen trading up next week, as the product is likely to be back in demand with the start of the festival season. Moreover, with monsoon retreating, construction activity is likely to pick up pace in the coming weeks. Investors are bullish on India Cements and Madras Cement as the companies have expanded their sales reach to eastern and western regions of the country owing to low demand in the southern region. India Cements had highlighted in Q1 (Apr-Jun) it is increasing presence in Maharashtra. Proportion of Southern region in overall volumes fell to 76% (Apr-Jun) vs 80% (earlier). As per our channel checks, Madras Cements has also ramped up sales in the Eastern region. UltraTech Cement, which acquired Jaiprakash Associates' 4.8-mln-tn cement unit
in Kutch, Gujarat, for around 38 bln rupees, may see some decline in the near term as the buyout is expected to dilute the Aditya Birla Group Company’s earnings per share over the next few quarter. The deal is positive in the long run considering the rise in market stock, synergy through market realignment, immediate cash flow, robust limestone reserves and also land for future expansion. However, the deal appears to be EPS and return ratio dilutive in the near term due to poor profitability of the plant.
Stocks of major cement companies are seen trading up next week, as the product is likely to be back in demand with the start of the festival season. Moreover, with monsoon retreating, construction activity is likely to pick up pace in the coming weeks. Investors are bullish on India Cements and Madras Cement as the companies have expanded their sales reach to eastern and western regions of the country owing to low demand in the southern region. India Cements had highlighted in Q1 (Apr-Jun) it is increasing presence in Maharashtra. Proportion of Southern region in overall volumes fell to 76% (Apr-Jun) vs 80% (earlier). As per our channel checks, Madras Cements has also ramped up sales in the Eastern region. UltraTech Cement, which acquired Jaiprakash Associates' 4.8-mln-tn cement unit
in Kutch, Gujarat, for around 38 bln rupees, may see some decline in the near term as the buyout is expected to dilute the Aditya Birla Group Company’s earnings per share over the next few quarter. The deal is positive in the long run considering the rise in market stock, synergy through market realignment, immediate cash flow, robust limestone reserves and also land for future expansion. However, the deal appears to be EPS and return ratio dilutive in the near term due to poor profitability of the plant.
