Cement Stocks
Outlook for the week – 11 to 14.08.2014
( www.rupeedesk.in )
Stocks of major cements companies
will be range bound next week, with companies
based in the South performing
better than their peers. South India based companies such
as Ramco Cements and India
Cements are likely to do well as newly-formed Telangana is
building a new capital.
Prices of cement usually fall
during the monsoon months but this time around they have
remained flat month-on-month.
Except in some regions of south and west, there was no
major price change across regions
from the previous month. Average prices were 323
rupees per 50-kg bag during July
against 322 rupees per bag in June.
Performance of cement
manufacturers was largely subdued in Apr-Jun compared to that
in the year-ago period, but on a
sequential basis, there was improvement in top line and
bottomline.
Large cap stocks like Ambuja,
UltraTech and Shree Cement have now reached their fair
valuations after the sharp rally
in the previous three months due to a favourable election
outcome. However, the midcap
space still has potential for further upside from current
levels.
In the midcap space, we like the
business fundamentals of JK Cement (doubling white
cement capacity), JK Lakshmi
Cement (strong presence in the north) and Heidelberg
(operating leverage and cost
efficiency measures). Hence, we continue to recommend buy on these three stocks.
