Cement Stocks Outlook
Budget to lend cues next wk; UltraTech seen dn
This story was originally published at 22:45 IST on 19 July 2024
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MUMBAI - The Union Budget of the new National Democratic Alliance government, to be presented by Finance Minister Nirmala Sitharaman on Tuesday, is expected to lend cues for cement stocks next week. During the Budget presentation, investors will closely look for policies such as housing schemes, allocation of funds for infrastructure projects, likely reduction in goods and services tax for cement from the current 28%, and the government's capital expenditure outlay, analysts said.
"Any increase in allocation to housing schemes like Pradhan Mantri Gramin Awaas Yojana and infrastructure projects will be viewed positively, as they constitute about 80% of cement demand," Incred Equities said in its strategy report on Thursday. "We believe any increase in the standard deduction for tax benefits on home loans for individuals should indirectly benefit the industry."
Today, amid the broad-based selling in the Indian stock market, most cement stocks, too, declined. Analysts said that there would be some caution among investors on Monday ahead of the Budget. The rise in the fear gauge India VIX also indicated some nervousness in the equity market. The volatility index rose for the fourth consecutive session today and closed 2% higher at 14.8250.
Coming to specific stocks, UltraTech Cement is likely to extend losses to Monday and open lower following a muted result for the June quarter. Lower realisation led to a mere 0.5% on-year increase in the cement company's consolidated net profit to 16.97 bln rupees, which was below the Street's estimate of 17.83 bln rupees. Its revenue rose 2% on year to 180.70 bln rupees in Apr-Jun, slightly lower than analysts' estimate of 180.93 bln rupees.
The stock extended losses and closed 3% lower at 11,258.30 rupees on the National Stock Exchange after the earnings were released. For the medium term, the stock is likely to trade in the range of 10,730-11,820 rupees, SBI Securities said in a note after the results.
TOP HEADLINES
* Earnings Review: UltraTech Apr-Jun PAT growth weak as realisation dn
* Earnings Review: Dalmia Bharat consol PAT up 9% YoY, beats mkt view
* UltraTech to buy 26% stake in Amplus Omega Solar for 243 mln rupees
* Earnings Outlook: Ambuja Cements' Apr-Jun PAT, revenue seen down
* Century Textiles Apr-Jun revenue down 2.3% YoY, PAT rises 27.7%
* India Bond Placement: Century Textiles OKs issuing 10-bln-rupee NCDs
* Earnings Outlook: Weak demand, muted prices may hit Ultratech Cement
* Earnings Outlook: Dalmia Bharat Apr-Jun consol PAT seen rising 3% YoY
Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
| ACC | 2619.80 | (-)2.50 | 2725.20 | 2543.50 |
| Ambuja Cements | 677.90 | 0.20 | 702.30 | 658.20 |
| India Cements | 347.05 | 16.50 | 363.60 | 327.90 |
| Shree Cement | 27284.15 | (-)1.40 | 28353.60 | 26573.30 |
| UltraTech Cement | 11258.30 | (-)3.00 | 11793.70 | 10961.00 |
| Nifty 50 | 24530.90 | 0.10 | 24977.90 | 24284.60 |
| S&P BSE Sensex | 80604.65 | 0.10 | 81985.80 | 79808.50 |
End
Reported by Anjana Therese Antony
Edited by Tanima Banerjee
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