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Stocks of major cement makers are seen trading with a negative bias next week, as March despatch data disappointed investors. The companies may post a muted revenue growth for Jan-Mar may also weigh on the stocks. The share prices will, however get support from the positive outlook for the sector in the near term. Most cement companies saw a only a marginal sequential rise in despatches for March, which is typically a seasonally strong period for the sector.UltraTech Cement despatched 4.1 mln tn cement in March, up from 3.31 mln tn in February, while Mangalam Cement's March despatches rose by a marginal 1.3% on month to 165,169 tn. Cement companies will detail their Jan Mar earnings later this month.Cement demand growth is expected to be unusually sluggish in 4QFY13 (Jan-Mar),given continued weakness in housing and infrastructure verticals. We estimate industry volumes to grow by 3.7% YoY (year-on-year). We expects the cement sector to have seen a marginal decline in capacity utilisation. We sees UltraTech Cement leading the pack in Jan-Mar earnings growth, but both Holcim group companies--ACC and Ambuja Cement-- are expected to report flat-tolower earnings. The companies' inability to increase prices amid low demand during Jan- Mar is likely to hurt earnings for the quarter. Mixed pricing trends across India would result in a meager 0.5% QoQ (quarter-on-quarter) increase in realisations on average for our coverage universe. For pan-India players, we expect realisations to increase 2%, while regional players (north and south) could see a marginal dip. We remain positive about the outlook for cement companies, on hopes that a recovery in broad economy will lead to a revival in demand. Shares of ACC may be eyed next week after the company said it has a 33-blnrupee capital expenditure plan for the current year ending Dec 31. Additionally, the company said the Competition Appellate Tribunal has concluded the first hearing in the cement price cartelisation case, and it is hopeful of a judgement this month. In June 2012, the Competition Commission of India had imposed a penalty on 11 cement companies, including UltraTech Cement, ACC, Ambuja Cements, Jaypee Cements, and Lafarge India. The penalty imposed was 50% of their respective net profit for 2009-10 and 2010-11 for cartelisation.
Stocks of major cement makers are seen trading with a negative bias next week, as March despatch data disappointed investors. The companies may post a muted revenue growth for Jan-Mar may also weigh on the stocks. The share prices will, however get support from the positive outlook for the sector in the near term. Most cement companies saw a only a marginal sequential rise in despatches for March, which is typically a seasonally strong period for the sector.UltraTech Cement despatched 4.1 mln tn cement in March, up from 3.31 mln tn in February, while Mangalam Cement's March despatches rose by a marginal 1.3% on month to 165,169 tn. Cement companies will detail their Jan Mar earnings later this month.Cement demand growth is expected to be unusually sluggish in 4QFY13 (Jan-Mar),given continued weakness in housing and infrastructure verticals. We estimate industry volumes to grow by 3.7% YoY (year-on-year). We expects the cement sector to have seen a marginal decline in capacity utilisation. We sees UltraTech Cement leading the pack in Jan-Mar earnings growth, but both Holcim group companies--ACC and Ambuja Cement-- are expected to report flat-tolower earnings. The companies' inability to increase prices amid low demand during Jan- Mar is likely to hurt earnings for the quarter. Mixed pricing trends across India would result in a meager 0.5% QoQ (quarter-on-quarter) increase in realisations on average for our coverage universe. For pan-India players, we expect realisations to increase 2%, while regional players (north and south) could see a marginal dip. We remain positive about the outlook for cement companies, on hopes that a recovery in broad economy will lead to a revival in demand. Shares of ACC may be eyed next week after the company said it has a 33-blnrupee capital expenditure plan for the current year ending Dec 31. Additionally, the company said the Competition Appellate Tribunal has concluded the first hearing in the cement price cartelisation case, and it is hopeful of a judgement this month. In June 2012, the Competition Commission of India had imposed a penalty on 11 cement companies, including UltraTech Cement, ACC, Ambuja Cements, Jaypee Cements, and Lafarge India. The penalty imposed was 50% of their respective net profit for 2009-10 and 2010-11 for cartelisation.
