Cement Stocks Outlook for the week – 02 to 06.11.2015
Sideways
movement seen in consolidation phase
Stocks
of major cement manufacturers are seen trading sideways next week as demand
scenario
for the sector remains dull, and a phase of consolidation is likely.
Cement
manufacturers have witnessed a fall in demand over the past few months with
activity
in the infrastructure sector not showing signs of a rebound. The cement
industry
is
seen back in the positive only by Jan-Mar. The market would also keep an eye on
the
Jul-Sep
earnings of India Cements Ltd, due for Monday, while also waiting for financial
results
of Prism Cement Ltd and Ramco Cements Ltd, scheduled for Tuesday and Friday,
respectively.
India
Cements is seen reporting net profit of 344 mln rupees for the quarter, up
almost
five-fold
from 74.90 mln rupees a year ago, owing to improvement in operational
performance
and firm pricing of products in the southern markets. We pegs the
company's
net sales at 10.91 bln rupees, down 4% on year, as muted demand is likely to
result
in weak volume growth during the quarter. We see the company's sales volume at
2.14-2.15
mln tn as compared with 2.35 mln tn a year ago.
We
expect better profitability from southern players given there was only mild
correction
in
prices in the south. But, volumes again will be disappointing. India Cements'
counter is
seen
trading with a minor positive bias during the week, unless the results have a
deviation
of over 10% from expectations, in which case it is seen moving in line with the
numbers.
Cement
companies typically see a weak quarter in Jul-Sep as monsoon keeps demand
subdued,
and this year the added hit of a slowdown in the infrastructure sector has been
detrimental
for the industry.
