Cement Stocks Outlook for the week – 01 to 05.02.2016
Down
next week on low cement demand; results eyed
( www.rupeedesk.in )
Stocks
of cement manufacturing companies are seen falling in the week ahead as
demand
for the building material remains persistently weak across large parts of the
country,
even as the market will look out for Oct-Dec earnings of cement companies.
Grasim
Industries is expected to declare its Oct-Dec earnings on Saturday, while
ACC,
Ambuja Cements will declare their earnings for the quarter on Feb 10. Grasim
Industries'
standalone net profit for Oct-Dec is seen down 46% quarter on quarter at
1.83
bln rupees. The company's standalone net sales are seen up a mere 1% at 18.35
bln
rupees. Operating margin, however, is expected to be higher at 14%.
Cement
companies' top lines are expected to remain weak in Oct-Dec, along with
their
operating margins, because of the repeated price cuts they have had to
undertake,
to
try to boost demand in a slow market. Despite the slowdown in the sector as a
whole,
analysts prefer certain companies such as UltraTech Cement. UltraTech's Oct-
Dec
earnings were also above market estimates. While the recent spell of subnormal
monsoons
has hurt rural demand, it is seen getting offset by a pick-up in government
infrastructure
spends and election led demand in few states. UltraTech would benefit
from
its expanded capacity and a more extensive presence across the country. The
stock
has corrected from its recent peak and largely factors in a subdued demand
scenario.