We
expect stocks of major cement companies to trade weak next week. Stocks of Chennai-based
India Cements Ltd and Ramco Cements will be in focus as they are scheduled
to detail their Oct-Dec earnings on Monday and Wednesday, respectively.
India Cements is expected to report a loss of 42 mln rupees for Oct-Dec against
a profit of 261 mln rupees a year ago. India cement's net sales is seen 1%
lower on
year at 10.68 bln rupees. Ramco Cements' Oct-Dec net profit is seen at 324 mln rupees,
61% lower on year, while its net sales is seen down 3% on year at 8.46 bln
rupees. With
no pick in demand for cement after monsoon, volumes for major companies are expected
to decline by 1-2% on year. Cement prices too have continued to remain under pressure.
Freight and fuel costs have increased, though marginally, during the quarter.
Though seasonal uptick is expected in Jan-Mar, there is limited visibility of a recovery
on a sustainable basis. While demand recovery is expected to be gradual, slowing
capacity addition coupled with higher capital expenditure and operational expenditure
cost would support cement prices and profitability, going forward. It said recovery
in demand would be critical for the company's operating as well as stock performance.
