Cement Stocks Outlook
Seen lower next wk after poor Apr-Jun results
This story was originally published at 22:16 IST on 9 August 2024
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MUMBAI - Shares of cement companies are seen lower next week as companies in the sector have posted weak earnings for the June quarter. This was largely due to the Model Code of Conduct implemented during the General Election hurting demand, and high competitive environment affecting pricing.
"Earnings so far this quarter have been weak as demand was muted due to elections during Apr-Jun. Demand is expected to improve post monsoon as construction activities and infrastructure spending pick up pace. Pricing can improve in Oct-Mar once capacity utilisation improves on higher demand," Tushar Chaudhari, research analyst with brokerage Prabhudas Lilladher, said.
On hope that demand will be better in the coming quarters, several cement companies are trading at high valuations, analysts said. These high valuations may keep gains capped going forward, lest demand improves significantly.
Among major companies, Shree Cement reported its quarterly earnings this week. Its net profit during the quarter fell 45% on year to 3.18 bln rupees, missing analysts' expectations of 5.58 bln rupees. Its sales also fell nearly 3% on year to 48.35 bln rupees despite volumes rising 8% on year. "Shree Cements' Q1 (Apr-Jun) was hurt by the greater volume share in the less-remunerative east market, stiff competition, more stabilisation expenses (new units), branding exercise, etc., along with a weak demand-pricing environment," Anand Rathi Share and Stock Brokers said in a report.
Cement stocks performed poorly this week. Shares of Shree Cement fell nearly 11% this week, those of UltraTech Cement declined 4%, and those of Ambuja Cements shed 3.2%.
TOP HEADLINES
* Prism Johnson posts 4.7-mln-rupee loss in Apr-Jun vs PAT year ago
* Granules India gets US FDA OK for trazodone hydrochloride tablets
* India Cements posts 574.6 mln rupees PAT in Apr-Jun vs loss yr ago
* CARE puts India Cements on rating watch with positive implications
* Shree Cement Apr-Jun PAT falls 45.3% on year, sales fall 2.7%
* Ambuja Cements to invest 16 bln rupees to set up cement unit in Bihar
* Gujarat Ambuja Apr-Jun sales fall 6.2% YoY but net profit rises 8.3%
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 | 2351.55 | (-)3.40 | 2399.40 | 2317.20 |
| Ambuja Cements | 632.00 | (-)3.20 | 651.30 | 620.50 |
| India Cements | 367.00 | (-)1.40 | 374.90 | 361.10 |
| Shree Cement | 24296.60 | (-)11.00 | 24965.50 | 23515.50 |
| UltraTech Cement | 11300.35 | (-)4.00 | 11544.80 | 11108.90 |
| Nifty 50 | 24367.50 | (-)1.40 | 24474.70 | 24257.60 |
| S&P BSE Sensex | 79705.91 | (-)1.60 | 80181.60 | 79311.30 |
End
Reported by Anshul Choudhary
Edited by Deepshikha Bhardwaj
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