Cement Stocks Outlook for the week – 24 to 28.10.2016 (Derivative settlement pressure seen next week)

Cement Stocks Outlook for the week – 24 to 28.10.2016

(Derivative settlement pressure seen next week)

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The derivatives settlement next week will weigh on shares of cement manufacturers as

it will put pressure on investors to exit long positions held by them. Although shares

will remain under pressure, they are not expected to fall sharply due to the prevailing

positive outlook for the sector.

Demand forecasts from two large-cap cement manufacturers UltraTech Cement and

ACC project healthy growth in the second half of the current financial year that ends

Mar 30.

Increased cement demand from government-funded infrastructure projects, especially in

rural India, will lead to better volume pick-up and realisations for cement companies.

Jul-Sep earnings of UltraTech Cement and ACC influenced their share prices during the

week, and are also likely to set the trend for the industry in the coming weeks.

Cement Stocks Outlook for the week – 17 to 21.10.2016

Cement Stocks Outlook for the week – 17 to 21.10.2016

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Stocks of cement manufacturers are expected to remain under pressure next week due to

the ongoing festival season and unexpected monsoon showers in some regions. However,

stocks are seen rising post Diwali, driven by higher volumes and prices. We believe the

pressure will continue for few more weeks, but post Diwali pick-up in infrastructure spends

from government projects will drive volumes and prices, which will be positive for cement

stocks.

We expect cement price and volumes to improve from November, and maintains a positive

stance on the sector for the next three years due to improving capacity utilisation, price

realisation, and higher operating margins. Cement companies in north, west, and central

India are expected to benefit the most from the rise in cement prices. In south India, prices

are already high, while east India is facing issues of lower capacity utilisation.

Stocks of UltraTech Cement, among the best performing large-cap cement companies, rose

2.6% in the three sessions of this holiday-truncated week. The stock has given a 52-week

return of around 39% so far.

Cement Stocks Outlook for the week – 03 to 07.10.2016 Seen down next week, large-cap stress to continue

Cement Stocks Outlook for the week – 03 to 07.10.2016

Seen down next week, large-cap stress to continue

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Stocks of cement manufacturers are expected to fall next week with pressure expected to continue

on large-cap companies such as ACC Ltd, Ambuja Cement and Ultratech due to higher valuations and likely impact of high pet-coke prices on their earnings in Jul-Sep. Ambuja Cement stocks fell 2.8% during the week and the pressure is expected to continue next week as well. UltraTech Cement, one of the best performing stock among the large cap cement companies til last week, fell 2.84% during the past five sessions. The stock has given a 52-week return of 42% till date. Analysts expect the mid-cap cement companies such as JK Lakshmi Cement, JK Cement and Orient Cement to perform well in the short to medium term due to healthy volume growth, and improvement in capacity utilisation.

Cement Stocks Outlook for the week – 19 to 23.09.2016 In a range next week, some profit booking seen

Cement Stocks Outlook for the week – 19 to 23.09.2016

In a range next week, some profit booking seen

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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.

Cement Stocks Outlook – 06 to 09.09.2016 In range, fine by antitrust body factored in

Cement Stocks Outlook – 06 to 09.09.2016

In range, fine by antitrust body factored in

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Stocks of cement companies are likely to stay range bound next week, with positive movement seen in UltraTech Cement and Ambuja Cement. The Competition Commission of India's imposition of 67 bln rupees as penalty on 11 cement companies has already been discounted by the market and it will

not have any direct impact on these stocks. The drop in cement prices in the current quarter (Jul-

Sep) in south and west India were compensated by higher price realisations in north and central

India. The market would await increase in prices as demand would pick up post monsoon, thereby

driving the cement sector. In August, cement prices remained stable in north and central India, with

weakness seen primarily in the west--Mumbai and Pune. Retail prices in the western region fell by as

much as 16 rupees per bag during the month.

Cement Stocks Outlook for the week – 08 to 12.08.2016 Seen up on positive momentum in broader market

Cement Stocks Outlook for the week – 08 to 12.08.2016

Seen up on positive momentum in broader market

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Stocks of cement manufacturing companies are seen trading with a positive bias next week due to

likely positive momentum in the broader market even as investors wait for the Reserve Bank of

India's monetary policy review on Tuesday. The broader market is seen trading higher next week led

by gains in Asian markets, following Bank of England's first rate cut in seven years. Cement stocks

will look for cues from the broad market due to paucity of sector or company-specific triggers next

week. Rains have curbed demand for cement across most of the country. The Jul-Sep quarter has

been a the traditionally weak quarter. Cement prices have declined by 5-30 rupees per 50-kg bag in

large parts of north India and dealers expect them to fall further. Analysts will await the Apr-Jun

earnings of JK Cement scheduled to be announced on Saturday.

Cement Stocks Outlook for the week – 04 to 08.07.2016 (Seen range bound as demand to ebb in monsoon)

Cement Stocks Outlook for the week – 04 to 08.07.2016

(Seen range bound as demand to ebb in monsoon)

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The Cement stocks are likely to trade range bound next week, after having witnessed a strong rally this week tracking the momentum in the broad market. The Major cement companies' stocks have gained 1.9-17.9% this week. The onset of the monsoon, however, is likely to keep the positive momentum for shares of cement companies in check.

The India Meteorological Department has projected the monsoon to cover the entire country by the first week of July, almost a week ahead of schedule. The weather bureau has pegged rainfall at 106% of long period average this year. While the monsoon will dampen cement demand in Jul-Sep, demand is seen bouncing back, particularly in north-eastern states, due to increased spending by state governments on infrastructure and housing development.

Shares of cement companies are mostly seen subdued this quarter, but strong Apr-Jun earnings following price hikes in key pockets of north and south India are seen driving shares. In the medium term, most brokerages are positive on shares of UltraTech Cement in the large cap space, and JK Lakshmi Cement among medium sized players.

Cement Stocks Outlook for the week – 27.06.2016 to 01.07.2016, To take cues from broader markets post Brexit

Cement Stocks Outlook for the week – 27.06.2016 to 01.07.2016, To take cues from broader markets post Brexit

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Cement stocks are likely to take cues from the broader market, which in turn is seen volatile next

week as foreign institutional investors are expected to continue selling due to uncertainty following

the 'Brexit'. UK voting to leave the European Union has sent shockwaves across markets worldwide.

What could also add to the volatility is the fact that next week traders will roll over positions to the

July derivatives contracts ahead of the expiry of the June series on Thursday. The cement sector's

fundamentals are seen rather stable with demand recovering, albeit at a slow pace, in some parts of

the country.

Pricing growth is also seen in east and south India. Cement prices in Andhra Pradesh and Telangana

recovered by around 60 rupees per 50-kg bag in May-Jun, after a sharp decline in March. Price hikes

by companies in northern and central India in March sustained through Apr-Jun and will support

earnings of companies based in northern India, while aiding pan-India companies. Positive on the

medium-term outlook of stocks of companies such as UltraTech Cement and JK Lakshmi Cement.

Stocks of these companies are preferred bets due to their better distribution and brand strength in

key geographies. UltraTech's capacity expansion will hold the company in good stead to meet any

sudden spurt in cement demand.

Cement Stocks Outlook for the Week – 20 to 24.06.2016 Seen trading in thin band with positive bias

Cement Stocks Outlook for the Week – 20 to 24.06.2016

Seen trading in thin band with positive bias

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After a rather tepid week, stocks of cement-manufacturing companies are seen trading in a thin band with a positive bias next week. Upbeat about the medium-term prospects of UltraTech Cement among large-cap companies, and JK Lakshmi Cement among mid-cap cement manufacturers. Stocks of UltraTech Cement are expected to gain from any spurt in demand, given that the company has procured 21.2 mln tn per annum of cement capacity from Jaiprakash Associates. JK Lakshmi Cement's shares are seen positive, in light of the company's focus on accelerating growth in eastern India.

The region continues to register strong cement sales growth due to high spending by state governments even as sales in west India remain weak, primarily due to the drought in Maharashtra. Overall demand for cement had been weak across regions over the past few months, and cement companies have even had to push sales volume in the interest of market share. Cement prices in Andhra Pradesh and Telangana have recovered by around 60 rupees per 50-kg bag in May-Jun, after a sharp decline in March. Price hikes taken in northern and central India in March sustained through Apr-Jun and will support earnings of companies based in northern India, while also aiding pan-India companies.

Cement Stocks Outlook for the week – 13 to 17.06.2016 (Up next week as demand revives in some areas)

Cement Stocks Outlook for the week – 13 to 17.06.2016

(Up next week as demand revives in some areas)

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Shares of cement manufacturing companies are seen trading higher next week as demand for the building material is seen picking up in central India and that in east India remaining strong. Except east India, demand for cement has been weak across regions over the past few months, but channel checks suggest revival in government spending in the central region ahead of state elections in Uttar Pradesh. East India continues to register strong cement sales growth on higher spending by state governments, even as cement sales in west India remain weak primarily due to drought in Maharashtra, Bagmar added.

Recovery in price is also likely to assist shares of cement companies. All-India cement prices rose by about 6 rupees to around 322 rupees per 50-kg bag in June. Cement prices continue to see a gradual improvement in west India, gaining around 20 rupees per bag since February, even though the region still has the lowest prices among all. Prices have remained stable in north, central regions after sharp hikes in March, which will boost realisation of companies in Apr-Jun, especially for regional companies with higher sales mix.

Cement Stocks Outlook for the week – 06 to 10.2016 (In narrow range with positive bias next week)

Cement Stocks Outlook for the week – 06 to 10.2016

(In narrow range with positive bias next week)

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The shares of cement manufacturing companies are seen trading in a thin band with a positive bias next week mainly due to strong sales performance of companies in the sector in Jan-Mar and better prospects of continued demand for the building material. Cement industry's Jan-Mar performance was strong exceeding estimates on operating front mainly on account of better-than-expected demand growth and substantial reduction in operating costs.

A healthy demand pick-up was witnessed across the country barring few pockets, which led the companies registering an average volume growth of around 14.5% year on year and around 12.8% quarter on quarter. We expect this sales momentum to drive cement shares up next week.

Cement Stocks Outlook for the week – 23 to 27.05.2016 (In narrow band next week with negative bias)

Cement Stocks Outlook for the week – 23 to 27.05.2016

(In narrow band next week with negative bias)

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Stocks of cement manufacturing companies are seen trading in a narrow band next week with a negative bias given companies' weak Jan-Mar earnings and persistently weak demand. Companies focused on driving sales volume in Jan-Mar, compromising on profitability. Pricing power with companies remains weak in a sluggish market. Cement demand has been weak across the country for the past six to eight months. Drought-like conditions in large parts of the country do not give much hope for a revival at least immediately.

Cement companies' shares are seen bloated at current levels given the weak market fundamentals, and some selling is seen in the near term in counters such as India Cements, JK cement. Positive about stocks of UltraTech, especially given the  company's acquisition of some of Jaiprakash Associates' plants. The additional capacity prepares UltraTech for any spurt in demand. UltraTech is also seen gaining from any demand spurt because the company has strong brand recognition and distribution in large parts of the country.

Cement Stocks Outlook for the week – 09 to 13.05.2016 Seen trading with negative bias on weak demand

Cement Stocks Outlook for the week – 09 to 13.05.2016

Seen trading with negative bias on weak demand

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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.

Cement Stocks Outlook for the week – 02 to 06.05.2016 Seen trading in range with negative bias

Cement Stocks Outlook for the week – 02 to 06.05.2016

Seen trading in range with negative bias

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Stocks of cement manufacturing companies are seen trading in a range with a negative bias next

week given the persistently weak demand for the building material in large parts of the country and

lower than estimated Jan-Mar earnings reported by some large companies. Around a fourth of the

country is facing water scarcity and drought, which has threatened 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. Though Ambuja Cements' sales volume growth is expected to

pick up as demand improves, the company would continue to lose market share in absence of

capacity increase. We expect Ambuja Cements' profitability to benefit from increasing pet coke

consumption and other cost improvement drives.

Cement Stocks Outlook for the week – 25 to 29.04.2016 (ACC, UltraTech, Ambuja Jan-Mar earnings eyed)

Cement Stocks Outlook for the week – 25 to 29.04.2016

(ACC, UltraTech, Ambuja Jan-Mar earnings eyed)

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Shares of cement manufacturing companies are seen taking cues next week from the

Jan-Mar earnings of ACC, Ambuja Cements, and UltraTech Cement, the country's three

biggest makers of the building material.

While UltraTech Cement will announce its Jan-Mar earnings on Monday, ACC and

Ambuja Cements will declare their Jan-Mar earnings on Thursday.

Low demand for the building material in the country is seen affecting Cement

companies' Jan-Mar earnings. The drought condition in large parts of the country is also

seen affecting cement companies' near-term performance.

Shares of cement companies will be affected in the near term due to shortage of water

in rural areas and a muted demand in urban areas.

ACC is seen reporting a 14.4% on-year fall in its Jan-Mar consolidated net profit to

2.02 bln rupees. Ambuja Cements is seen reporting a 17% on-year fall in its Jan-Mar

net profit to 2.64 bln rupees.

Cement Stocks Outlook for the week – 18 to 22.04.2016

Cement Stocks Outlook for the week – 18 to 22.04.2016

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Stocks of cement manufacturers are seen trading with a positive bias next week, primarily because of forecast of above normal monsoon rains this year, which is expected to improve rural incomes and consequently spur spending on home construction.

Housing is the single biggest demand segment for cement in the country. On Tuesday, the India Meteorological Department forecasted the southwest monsoon rains this year at 106% of the long period average or 6% above normal.

Among large cement companies, expect UltraTech Cement to gain the most in the near term, given its better distribution reach and brand pull across the country

UltraTech Cement stock are expected to limited upside from their current level. Since Mar 4, the stock has appreciated by 10% on account of change in pricing dynamics for

cement companies across the country (except south) and long-term positive effect of the

company's deal to buy some cement units of Jaiprakash Associates.

JK Lakshmi Cement stocks are preferred bet in the mid-cap companies space. Apart from this, cement companies' Jan-Mar earnings are also expected to guide investors. Ambuja Cements is expected to declare its Jan-Mar earnings on Apr 28. 

Cement Stocks Outlook for the week – 11 to 15.04.2016 (Seen trading with negative bias on weak demand)

Cement Stocks Outlook for the week – 11 to 15.04.2016

(Seen trading with negative bias on weak demand)

( www.rupeedesk.in )

Shares of cement manufacturers are seen trading with a negative bias next week, primarily because of persistent weak demand for the building material in large parts of

the country.

Through the past month, cement makers have increased prices in northern and western

India, even as demand remains weak. Drought-like conditions in large parts of the country are seen further hitting demand in rural regions. For demand to pick up, the

industry has pinned its hopes on the roads sector.

Among large cement companies, shares of UltraTech Cement are seen gaining the most,

given the company's wide reach across the country and its large manufacturing capacity, with which it would be best, placed to meet any sudden surge in demand. Among mid-cap cement companies, shares of JK Lakshmi Cement are seen faring better than those of its peers, as the company has more idle capacity and stronger hold, particularly in north India.

Cement Stocks Outlook for the week – 04 to 08.04.2016 RBI review to guide stocks; UltraTech seen up

Cement Stocks Outlook for the week – 04 to 08.04.2016

RBI review to guide stocks; UltraTech seen up

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Stocks of cement manufacturers are expected to be guided by the Reserve Bank of India's monetary

policy review on Tuesday. UltraTech Cement's shares are expected to continue to rise next week,

following its board approving a pact to buy capacity of 21.20 mln tn a year from Jaiprakash Associates at an enterprise value of 159 bln rupees. Jaiprakash Associates plans to cut its debt with the proceeds of the sale. Yesterday, stocks of the company ended up 10.4% at 8.50 rupees on the National Stock exchange. Acquisition of Jaiprakash Associates' capacity will augur well for UltraTech in terms of gaining market shares, enhancing growth and saving capital costs.

After the deal, UltraTech will become the fourth-largest cement player globally, by capacity. From a

long-term perspective, the deal is expected to be earnings-accretive for the company, led by synergy

benefits. Further, with this deal, UltraTech will have presence across various regions (except the

Northeast,) enabling it to reap the benefits of a demand recovery led by higher government spending

on infrastructure and a revival in housing demand. With industry-leading growth, following consistent capacity addition, higher margins and healthy cash flows, the brokerage house maintains its positive view.

Economic developments since the February policy review strengthen the case for monetary easing.

The central government has exhibited fiscal prudence by sticking to the 3.5% fiscal deficit target for

2015-16 (Apr-Mar), something the RBI has pitched for. Cement stocks are likely to gain if interest

rates are cut, as cheaper borrowing is expected to boost industrial activity.

Cement Stocks Outlook for the week – 21 to 25.03.2016 Seen range bound with positive bias next week

Cement Stocks Outlook for the week – 21 to 25.03.2016

Seen range bound with positive bias next week

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Stocks of cement makers are expected to trade in a range next week but with a positive bias as most

companies, particularly the big ones--ACC, Ambuja Cements and UltraTech Cement--are expected to trade positively. The current value of major cement companies are low and serve as attractive entry point for investors. The Ambuja Cement Company’s current valuations are relatively inexpensive, considering its strong retail franchise and size as India's second largest cement maker.

The company is also valued for its strong regional presence in the country. Even UltraTech Cement

shares are seen in positive light. UltraTech Cement offers the best opportunity to play the cement

sector in India and the stock can continue to outperform in the near term. Cement demand across the

country continues to remain weak. This month, cement prices rose across regions.

Cement Stocks Outlook for the week – 08 to 11.03.2016 Seen continuing the positive bias

Cement Stocks Outlook for the week – 08 to 11.03.2016

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Stocks of cement-manufacturing companies are seen continuing the momentum

gained over the past week and trading with a positive bias.

Various proposals in the Union Budget for 2016-17 (Apr-Mar) have been positive for

the cement sector. In the Budget, the government significantly increased allocation to

agriculture and farmers' welfare, which will boost rural incomes and cement demand.

The total central Plan outlay for the roads and infrastructure sectors has also been

raised, which is expected to boost demand for cement.

The cement industry, which derives around 60% of its demand from housing, 20%

from infrastructure and 20% from industrial activities, will benefit from the increase

in allocation towards housing and infrastructure.

The government's focus on infrastructure is evident from the fact that

overall targeted expenditure for FY17 is 28% more than in FY16. This, along with a

number of benefits provided on affordable housing, will aid recovery in cement

demand.