Cement
Stocks Outlook for the week – 09 to 13.05.2016
Seen trading with negative bias on
weak demand
( www.rupeedesk.in )
Stocks of cement manufacturing
companies are seen trading with a negative bias next week given
the persistently weak demand for the
building material in large parts of the country. Around a fourth
of the country, particularly north,
west and central India, is facing water scarcity and drought, which
threatens agricultural output and
rural incomes, in turn making prospects of cement demand bleak.
Cement companies have also not been
able to hike product prices much, adversely affecting their
near term prospects of profitability.
Large parts of the country have seen
cement companies cutting price to push sales and hold on to
market share. Some big cement
companies' Jan-Mar earnings have also been below market
expectations, dampening investor
sentiment in stocks in the category. However, We are upbeat on
the medium term outlook for shares of
UltraTech Cement, among large cement companies, and JK
Lakshmi Cement among the mid-size
cement makers. Analysts see capacity expansion by these
companies as benefiting them, in the
event of an upswing in cement demand. These companies also
have good reach across the country
and strong brands to fall back on, which is expected to work in
their favour.