Cement Stocks Outlook
Cost saving measures, price hikes key near-term cues
This story was originally published at 20:46 IST on 21 February 2025
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MUMBAI - Price hikes and cost-saving measures undertaken by cement companies are expected to be the major near-term triggers for the sector, analysts tracking it said. The overall sentiment towards the cement industry is seen improving as the execution of infrastructure projects is picking up and the government is ramping up its spending, which is a positive for cement volume growth.
Price hikes implemented in January are expected to be soon absorbed by the industry. If prices are increased more in February and March, it will aid the March quarter earnings of cement companies, Jainam Shah, a research analyst at IndSec Securities & Finance, said. Companies are taking measures to reduce costs, with Ambuja Cements having an aggressive cost reduction target at INR 3,600 per tonne, Shah said.
If the price hikes in recent months are absorbed by market, it will directly aid the earnings of these companies because it will lead to a 3-4% increase in realisations for the March quarter, Tushar Chaudhari, vice-president of institutional research at Prabhudas Lilladher, said. Investors are cautious at present because of general slowdown and high valuations in the Indian stock market, Chaudhari said. However, he is bullish on the sector as its earnings depend on housing and infrastructure activities, and India remains one of the fastest growing nations.
Prices improved marginally in January and February, compared with average prices seen in the December quarter, Nuvama Institutional Equities said in a report. These are likely to remain stable going ahead as the industry's focus shifts to volumes rather than pricing in the March quarter, the broking house said. However, chances of any substantial price hike in the near term remain bleak due to higher competition intensity, it said.
JM Financial Institutional Securities expects the industry's profitability to improve further in the March quarter on the back of higher exit prices and better operating leverage, led by peak seasonal demand, it said in a research report. The broking firm's top picks are UltraTech Cement among large-cap companies and J.K. Cement in mid-caps, it said.
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:
| Company | Price | Week-on-week change in % | Resistance | Support |
| ACC LTD | 1884.00 | 0.50 | 1916.20 | 1851.60 |
| AMBUJA CEMENTS LTD | 481.95 | (-)1.50 | 492.00 | 471.00 |
| ANDHRA CEMENTS LTD | 66.69 | 6.40 | 72.30 | 60.50 |
| GRASIM INDUSTRIES LTD | 2431.05 | (-)0.00 | 2480.80 | 2376.20 |
| J.K. CEMENT LTD | 4580.15 | (-)1.70 | 4757.00 | 4467.70 |
| JK LAKSHMI CEMENT LTD | 709.85 | (-)4.70 | 724.00 | 692.00 |
| SAGAR CEMENTS LTD | 192.25 | 5.00 | 199.40 | 186.50 |
| SHREE CEMENT LTD | 28405.70 | (-)0.50 | 28806.00 | 27979.30 |
| ULTRATECH CEMENT LTD | 11157.25 | (-)1.00 | 11445.80 | 10845.80 |
| INDIA CEMENTS LTD | 258.85 | (-)8.20 | 270.90 | 251.10 |
| NIFTY 50 | 22795.90 | (-)0.60 | 23013.10 | 22611.70 |
| BSE SENSEX | 75311.06 | (-)0.80 | 76027.00 | 74754.40 |
End
Reported by Noopur Bhandiwad
Edited by Deepshikha Bhardwaj
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