Cement Stocks Outlook for the Week – 15 To 19.12.2014
( www.rupeedesk.in )
Stocks of cement companies to be subdued next week as
repeated price cuts by manufacturers are expected to reflect on their earnings, even though the
sales volume remains positive. After a price cut in October and prices remaining subdued
through November, cement manufacturers announced another round of cuts in December.
Companies like Ultratech Cement, ACC, and Ambuja Cements slashed prices by 5-20
rupees per 50 kg bag last week in key markets.
Demand-supply for cement is not good. Semi-urban and rural
areas are the ones that are driving demand. It will take some more time for sales to
pick up and it is difficult to put a timeline but it will take around six to nine months for
sales to grow. India's industrial growth contracted 4.2%, a three-year low, in October as consumer
durables output declined sharply.
In Jul-Sep, India's real gross domestic product growth
slowed to 5.3% as industrial growth nearly halved during the quarter. The country's GDP had
expanded 5.7% in Apr-Jun and 5.2% in Jul-Sep last year. The industry grew 2.2% in Jul-Sep
against 4.2% in the previous quarter and 2.6% a year ago. Growth in the cement sector is directly
related to GDP growth.
India Cements will be in focus with the company's
Vice-Chairman and Managing Director N.Srinivasan caught in the Indian Premier League
controversy.
