Cement Stocks Outlook for the week – 09 to 13.Jun.2014
(www.rupeedesk.in)
(www.rupeedesk.in)
Stocks of major cement companies
to trade with a positive bias next week, as prices of
the construction material are
seen steady in the short-term, at least before the start of fullfledged
monsoon. In a last bid to gain
some price realisation before the usually-lull
monsoon months, cement companies
across the country have hiked prices by 10-60
rupees per 50-kg bag.
While the top three cement
manufacturers--UltraTech, ACC, and Ambuja--have already
raised product prices, small
players may implement the hike gradually in some parts of
the country. The price hike in
southern India, particularly Andhra Pradesh, is high at 50-
60 rupees per bag, while the rise
was in the range of 10-15 rupees in the rest of the
country.
Market on the whole is on a roll
and cement sector stocks will also follow the trend.
There is a general optimism that
things have bottomed out and demand will improve on
the back of revived construction
and infrastructure sectors. Cement demand has grown at
around 6% annually in the last
four years (2010-14), the slowest pace in past two decades
for four consecutive years.
The cement demand has been at a
13-year low at around 4% and is expected to grow at
9% in H2FY15/FY16 (Oct-Mar) on
the back of revival in sentiments and unleashing of
pent-up demand against the dismal
growth of 6% in FY10-14. Given this backdrop, we
like ACC on the back of
attractive valuations and play on improved operations,
UltraTech and Shree cement,
driven by strong quality of operations, While in mid caps,
we like Ramco cement and JK
Lakshmi cement.
