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Informist, Friday, Nov 29, 2024

MUMBAI - Shares of cement companies are likely to rise further next week, with analysts expecting the sentiment towards the sector to improve gradually. "The demand environment is expected to improve in the coming weeks and if so, companies may go for price hikes," an analyst tracking the sector said.

Weak realisations, pricing pressures, slowdown in infrastructure-related activities, muted demand, and an extended monsoon had hit the financial performance of cement manufacturers in India, particularly during the September quarter. Most cement companies had posted on-year decline in their bottom line and top line. 

"With the festive season and monsoon behind us, cement demand is expected to improve going forward, driven by GOI's (government's) focus on infrastructure and higher rural demand," Prabhudas Lilladher said in its strategy report. Realisations are likely to improve, supported by anticipated price hikes as volumes pick up, the broking firm said. 

On other hand, ICRA expects growth in cement volume to moderate to 4-5% on year in Oct-Mar, compared to the earlier expectation of 7-8%. This would be due to slower-than-expected ramp-up in construction activity across the housing and infrastructure sectors, post the General Elections, ICRA said. The likely improvement in farm cash flows, an upbeat kharif output, and elevated replenishment levels of reservoirs supporting the rabi crop sowing are expected to boost the rural consumption in Oct-Mar, which should aid cement demand for the rural housing segment, it added. 

Talking about pricing, Elara Capital said the quarter-to-date all India average cement price increased modestly by about 2% from the previous quarter, but remained 9% lower from a year ago. The broking firm also said price hikes of INR 5-INR 25 per bag are likely in several regions in December. 

Most cement stocks closed higher this week, up for the second consecutive week. Among top gainers were ACC and Ambuja Cement that gained over 6% each this week. The surge in these stocks came after Adani group said its chairman and other senior officials were not charged with violations of the US Foreign Corrupt Practices Act. These stocks had tumbled last week after reports said a US court charged the management of the conglomerate with a bribery case. 

TOP HEADLINES
* ICRA cuts cement volume growth projection for FY25 to 4-5% from 7-8%
* NCLT approves UltraTech's acquisition of Kesoram Industries
* FY25 cement demand seen moderating to 5-6% on high base effect - CareEdge
* India Bond Placements: UltraTech Cement raises INR 10 bln via 10-year bond

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 Akul Nishant Akhoury

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