Cement
Stocks Outlook for the week – 29.12.2014 to 02.01.2015
( www.rupeedesk.in )
Stocks of most cement companies are seen trading down next week
because of profit booking. However, some long-term investors may look to build position in stocks
such as UltraTech in anticipation of a pick-up in demand during Jan-Mar.
The continued slackness in secondary sales/real Demand during December
despite weak base in October and November. Given the elevated inventory levels and onset
of calendar yearend discounts, prices are expected to remain weak in December.
We are bullish on UltraTech Cement after its acquisition of cement
units of Jaiprakash Associates early this week. Under the deal, the Aditya Birla Group
company will acquire two cement manufacturing plants of Jaiprakash Associates in Madhya Pradesh
for 54 bln rupees.Post acquisition, UltraTech's capacity is likely to increase to nearly
65 mln from 60 mln tn at present. The company also has plans to further increase capacity to 71
mln tn by end of 2015- 16 (Apr-Mar).
Increased capacity in MP (Madhya Pradesh) is likely to increase
UltraTech Cement's market stock and give the company ready access to completed plant.
Thus, this deal is likely to positive for UltraTech Cements with a long term view. UltraTech is
well prepared to ride the impending upturn coupled with premium profitability and healthy
balance sheet make it the most attractive bet in
cement universe.