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Informist, Friday, Dec. 20, 2024

MUMBAI - Shares of cement companies, which took a breather from weeks of gains, are likely to be muted next week in the absence of key triggers. However, analysts are betting on a pickup in the government's capital expenditure cycle by the remaining part of the financial year, along with some mergers and acquisitions by major cement players in the country. These, coupled with sustained momentum from housing and real estate sectors, are likely to make things better for cement players, who had felt the heat of lower realisations, muted demand, and poor earnings growth. 

Cement volumes grew 3-5% on year in Oct-Nov, despite a challenging time in October due to unseasonal rains and a high base, Motilal Oswal Financial Services said in its report. "Notable, November saw a significant 20-22% YoY growth, recovering from October's 10-11% decline," the report said. The broking firm expects the cement sector to remain structurally resilient, with strong demand fundamentals and improving cost structures. However, sustained price improvements and mitigation of competitive pressures will be critical for realising long-term profitability, it added. 

Analysts said that some cement companies are looking at mergers and acquisitions to increase their capacity and expand their market share. UltraTech Cement Ltd. got approval from the Competition Commission of India to acquire 32.72% stake in India Cements Ltd. from promoters and members of the promoter group of the latter company and Sri Saradha Logistics. 

Also, Ambuja Cements Ltd. announced the merger with Sanghi Industries and separately, with Penna Cement. This is expected to attain operational synergies and improve efficiency through enhanced working capital management, Nuvama Institutional Equities said. "We like Ambuja Cements for its healthy capex plans and measures being undertaken to enhance cost efficiency," the broking firm said. It has a 'hold' rating on the stock, with a target price of INR 667. The stock closed 2.6% lower at INR 548.80 Friday on the National Stock Exchange. 

TOP HEADLINES
* Ambuja Cements to issue 12 shrs for Sanghi Ind's 100 as board OKs merger

* CCI approves UltraTech Cement's acquisition of India Cements 

* Adani group to invest INR 48 bln in Bihar's cement, logistics sectors 

* JK Cement wins bid for Mahan coal mine in Madhya Pradesh 

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

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