More Stories

Informist, Friday, Nov 22, 2024

MUMBAI - Cement stocks are likely to see muted gains next week in the absence of major triggers, though the medium-to-long term outlook on the sector is expected to remain bullish. "Currently, demand and volume growth remain subdued...we need clear signs about recovery in demand and the impact of pricing," an analyst tracking the sector at a domestic broking firm said. During the September quarter, cement companies reported weaker realisation and were among the very few sectors which posted on-year declines in both bottom line and top line growth.

When it comes to the medium-term outlook, analysts continue to believe that the demand for cement will improve during Oct-Mar, led by higher government capital expenditure, infrastructure projects, and growth in the real estate market. "Some companies are also looking at increasing their capacity either through acquisitions or new plants. Cost optimisation measures may also back the growth in the coming quarters," the analyst said. Though cement prices have stabilised during the current quarter compared to Jul-Sept, demand recovery could be gradual in the second half of the financial year, the analyst added.

Sharekhan said that the overall outlook for the sector remains positive. The broking firm's preferred picks from the sector include UltraTech Cement, Grasim Industries, Shree Cement, Dalmia Bharat, and The Ramco Cements, it said in a research report Thursday. Sharekhan had downgraded its earnings estimates for UltraTech for the current and next two financial years to factor in higher other expenses and depreciation. It also cut the estimates for Shree Cement to factor in lower volume growth and higher depreciation expenses. 

Compared to the previous week, most cement companies closed in the green this week, except ACC and Ambuja Cement which tumbled on the bribery allegations against the Adani group chairman and other senior officials. Both companies are part of the Adani group. The US Justice Department Thursday issued an arrest warrant against Gautam Adani and his nephew Sagar Adani over an alleged multi-billion-dollar bribery and fraud scheme involving his solar projects in India. ACC and Ambuja Cement, which closed lower by 7% and 12%, respectively Thursday, ended around 3% higher each Friday.

"There are worries that the cost of borrowing by the group companies would increase due to the case. As this is the first time the conglomerate deals with such a case, investors were worried about the continuity of the group's ongoing projects and its access to funds," an analyst said on the condition of anonymity.

Following the case, S&P Global Ratings Friday the ratings outlook on Adani Ports and Special Economic Zone and of Adani Electricity Mumbai to negative, while reaffirming the 'BBB-' rating. On Thursday, Moody's Ratings said the indictment of Adani group chairman Gautam Adani and seven other senior officials is credit-negative for the group companies. Investors will continue to keep track of developments related to the case and what measures would be taken in the days to come.

TOP HEADLINES
* India Bond Placements: UltraTech Cement seeks bids for 10-year bond on Mon
* Grasim arm starts commercial production of paints at new plant in Karnataka
* UltraTech Cement may tap mkt with 10-yr bond by next wk to raise INR 10 bln
* UltraTech Cement's finance panel OKs plan to raise up to INR 30 bln via NCDs
* Analyst Concall:Grasim eyes high single-digit share in India paints mkt FY25
* Earnings Review: Grasim PAT misses view, down 9% YoY as expenses rise

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:

End

Reported by Anjana Therese Antony
Edited by Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.