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Informist, Friday, Jan. 10, 2025

MUMBAI – Following a more than 10-15% correction last year, cement stocks might see a slight recovery in the near term, an analyst tracking the sector at a domestic broking firm said. While these stocks are expected to outperform in the second half of 2024-25 (Apr-Mar), concerns about weak retail demand and lower government spending remain in the near term. 

"However, until these companies undertake some price hikes, we see the downtrend in cement companies on the technical charts continuing," Jatin Gedia, a technical research analyst at Mirae Asset Sharekhan, said. While these companies took price hikes in the month of December, pricing should still be watched closely as the companies are likely to further hike prices by INR 10-INR 15 for the 50-kg bag around March, Gedia said. The pricing growth for cement companies for the December quarter will be around 2-3%, lower than the usual 5-6% growth, a research associate at Prabhudas Lilladher said.

It is high time that demand picks up, and government capital expenditure comes in, but this is only expected to somewhat materialise in the last two months of the current financial year. However, demand picked up in December and is likely to continue in the March quarter as central and state governments' capital expenditure is likely to pick up pace after being sluggish up until November, Nuvama Institutional Equities said in a research note. 

As all eyes are now set on the December quarter earnings, analysts said the market players have already factored in the expectation of earnings and see no major setback. While Oct-Dec earnings will be mixed, it will be better sequentially, the research associate said. He expects the revenues of these companies to grow around 10% during the quarter and their volumes to rise 10% sequentially as well, but falling short of expectations. He is bullish on major cement players such as Ambuja Cements Ltd., ACC Ltd., and UltraTech Cement Ltd. "Their volumes will not be as affected as other players as they know how to play the market conditions," the analyst said.  

UltraTech Cement was the top loser this week, falling 7.8%. On Friday, shares of the company closed at INR 10,865.20 on the National stock exchange, down 3.5%. Ambuja Cements, ACC, and Grasim Industries Ltd. also closely followed suit with them losing around 6-7% during the week. 

TOP HEADLINES

* Vadraj Cement's committee of creditors OKs Nuvoco Vistas's resolution plan 

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

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Reported by Steffy Maria Paul and Noopur Bhandiwad

Edited by Deepsjhikha Bhardwaj

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