Cement Stocks Outlook
Seen dn as Jul-Sep earnings may be subdued
This story was originally published at 20:11 IST on 27 September 2024
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MUMBAI – Cement stocks are seen lower in the upcoming week with companies in the sector mostly expected to post subdued earnings for Jul-Sep, as some faced challenges such as rain in select regions, which affected demand and resulted in issues with sand and concrete availability.
"Weak demand and cement prices coupled with negative operating leverage are likely to hit the profitability of the industry in Q2FY25 (Jul-Sep)," Elara Securities (India) said in a report. "However, we expect a gradual recovery in cement demand in the upcoming quarters which should enable the industry to take some price hikes."
A sharper improvement in earnings for the sector is unlikely in the current weak pricing environment, global brokerage CLSA said this week, as per media reports. This contrasts with the current market expectation, which is overestimating a sharp recovery in corporate earnings for these companies, according to the reports.
With respect to cement prices, there was a recovery in September, with prices on average across regions rising by 7 rupees per 50 kg bag, Elara Securities said. Despite this, the average cement price across the country fell 8 rupees per bag on a sequential basis in Jul-Sep, but lower than the average sequential drop of 12 rupees per bag seen in the past five years, it said.
Today, shares of UltraTech Cement ended nearly 1% lower at 11,952.30 rupees on the National Stock Exchange. The stock hit a lifetime high earlier in the day, but failed to sustain gains. Meanwhile, shares of ACC, Ambuja Cements, and Shree Cement ended 0.4-1.4% higher.
Following are the resistance and support levels for leading cement stocks for next week as per calculations based on their prices on the NSE:
| Company | Price | Week-on-week change in % | Resistance | Support |
| ACC | 2483.30 | 1.60 | 2554.20 | 2404.50 |
| Ambuja Cements | 634.00 | 2.80 | 644.50 | 617.90 |
| India Cements | 359.20 | (-)0.70 | 366.10 | 354.90 |
| Shree Cement | 26247.90 | 4.40 | 26854.20 | 25639.60 |
| UltraTech Cement | 11952.30 | 1.30 | 12218.30 | 11791.80 |
| Nifty 50 | 26178.95 | 1.50 | 26328.50 | 26076.60 |
| S&P BSE Sensex | 85571.85 | 1.20 | 86178.60 | 85171.20 |
End
Reported by Alina Geogy
Edited by Rajeev Pai
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