Cement Stocks
Outlook for the week – 13 to 17.10.2014
( www.rupeedesk.in )
Stocks of major cement companies
are likely to trade in the green next week on optimism of a
pick-up in demand with monsoon
rains having receded. Also, there are high expectations that
Jul-Sep will be a stable quarter
for cement companies in terms of volume uptick and operating
margins.
Industry volume growth is
expected to remain steady at 6-7% during Q2 (Jul-Sep)(vs 8-9% YoY
in Q1), benefiting from improving
business sentiment and lower rainfall (YoY). There was a
seasonal fall in average cement
prices in across the country, except in south India, where prices
declined only marginally.
However, cement companies managed
to arrest the sharp correction in prices despite monsoon
regaining momentum in the latter
part of September. We expect the sustained volume revival to
continue supporting realisations
and maintain a positive outlook for the sector.
We continue to prefer UltraTech
in the large cap space. Among midcaps, we like JK Cement, JK
Lakshmi & Heidelberg Cement
due to their presence in strong regions and well timed expansions, while India Cement can be a major
beneficiary of a strong demand.
