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We expect stocks of major cement companies to trade in the positive space during the week as recovery in price, despite a slow growth in demand; of construction material is seen auguring well for manufacturers' margins. Cement companies announced price hike of 10-25 rupees per bag across regions in the first and second week of November. These come after the previous price increase, during the last week of September, was rolled back in October. The rise in prices was primarily led by strong production discipline rather than improvement in demand. Sustainability of price recovery, improvement in operating and stock performance is critically dependent on sustained demand recovery. In large caps, we prefer ACC and Shree Cement, while in mid caps we prefer Madras Cement, Dalmia Bharat and Birla Corp.
There are indications of a further rise of 10-15 rupees per bag in the first week of December. Cement demand improved in the past 10 days in certain pockets of the retail segment after the festive season but the demand from the institutional segment was absent. We expect improvement in cement demand with the festive season over, labour shortage problem easing, recent lifting of sand mining ban in Rajasthan, likely traction in pre-general election spending with the assembly elections in some states over and rural demand picking up. We continue to believe in a gradual recovery in cement demand as well as prices in 2HFY14.
We expect stocks of major cement companies to trade in the positive space during the week as recovery in price, despite a slow growth in demand; of construction material is seen auguring well for manufacturers' margins. Cement companies announced price hike of 10-25 rupees per bag across regions in the first and second week of November. These come after the previous price increase, during the last week of September, was rolled back in October. The rise in prices was primarily led by strong production discipline rather than improvement in demand. Sustainability of price recovery, improvement in operating and stock performance is critically dependent on sustained demand recovery. In large caps, we prefer ACC and Shree Cement, while in mid caps we prefer Madras Cement, Dalmia Bharat and Birla Corp.
There are indications of a further rise of 10-15 rupees per bag in the first week of December. Cement demand improved in the past 10 days in certain pockets of the retail segment after the festive season but the demand from the institutional segment was absent. We expect improvement in cement demand with the festive season over, labour shortage problem easing, recent lifting of sand mining ban in Rajasthan, likely traction in pre-general election spending with the assembly elections in some states over and rural demand picking up. We continue to believe in a gradual recovery in cement demand as well as prices in 2HFY14.
