Cement Stocks Outlook
Seen in range amid uncertainty in price hikes
This story was originally published at 22:06 IST on 30 August 2024
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MUMBAI - Cement companies' stocks may consolidate next week amid uncertainty around price hikes. Several cement companies attempted to hike prices in August, but a large part of those increases had to be rolled back due to weak demand, analysts said.
"Major price hike of 40-50 rupees per bag is likely in East India while cement firms in other regions may attempt price hikes of 10-25 rupees per bag. However, part of it is likely to be rolled back due to weak demand and lack of discipline among firms," Elara Securities said in a report on Wednesday.
Weak domestic demand was a major reason for muted performance during the June quarter, analysts covering the cement sector said. Things are not expected to improve drastically for cement companies in the September quarter either.
"The outlook for 1HFY25 (Apr-Sep) appears muted. Prices have fallen for 10 straight months (from November 2023 to August 2024) and are currently at a 3-year low," Nirmal Bang Institutional Equities said in a report on Tuesday. Owing to this, the brokerage cut its year-on-year volume growth estimates to 7.5% in 2024-25 (Apr-Mar), down from the earlier estimate of 8.5% rise in volumes.
However, worries around weak demand are unlikely to push investors to dump cement companies' shares as demand is expected to improve in the second half of this financial year. With election-related disruptions gone, and the monsoon season nearing its end, analysts expect construction activity to begin soon. Even after lowering volume growth expectations, Nirmal Bang Institutional Equities has a 'buy' rating on the sector as it expects demand after festivals to help revive product prices.
TOP HEADLINES
* Shree Cement gets 2 tax demand orders from Patna GST body
* Holderind sells 2.76% in Ambuja Cements, promoter stake now 67.53%
* UltraTech raises $500 mln via sustainability-linked loan from 6 banks
* JK Cement reappoints Ajay Kumar Saraogi as CFO, dy MD for 5 more yrs
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 | 2329.15 | 0.20 | 2353.60 | 2299.90 |
| Ambuja Cements | 617.05 | (-)2.60 | 628.30 | 603.80 |
| India Cements | 362.70 | (-)1.30 | 374.60 | 351.60 |
| Shree Cement | 25482.00 | 3.10 | 26036.50 | 24532.70 |
| UltraTech Cement | 11301.90 | (-)0.40 | 11433.80 | 11156.00 |
| Nifty 50 | 25235.90 | 1.70 | 25303.50 | 25165.60 |
| S&P BSE Sensex | 82365.77 | 1.60 | 82800.60 | 82038.60 |
End
Reported by Anshul Choudhary
Edited by Rajeev Pai
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