Cement Stocks Outlook
for the week – 19 to 23.09.2016
In a range next week,
some profit booking seen
Stocks of major cement manufacturers are seen trading in a
narrow range next week, with spells of
profit booking likely as the stocks are still trading at
their peak valuations. The stocks are expected to
remain range-bound and experience bouts of profit booking.
So far in 2016, stocks of ACC, Grasim
Industries, Ambuja Cements, UltraTech Cement, JK Lakshmi
Cement, Shree Cement, India Cements,
Ramco Cements, Heidelbergcement, Mangalam Cement, Dalmia
Bharat have risen 20-106%. Stocks
of JK Lakshmi Cement touched a record high yesterday.
Cement stocks have touched their peak valuations in the last
couple of years, driven by demand in
south India and the proposed development of new cities in
Telangana and Andhra Pradesh. The
average capacity utilisation rate of domestic cement makers'
plants had touched a low of 68% in the
year ended March due to a supply glut. In the improving
demand scenario, the utilisation rates are
seen rising to 72% and 78% for 2017-18 and 2018-19,
respectively. In the medium- to long-term, a
pick-up in construction activity in the infrastructure
space, revival of investment cycle and likely
recovery of rural demand following good rains will benefit
the cement industry.