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Informist, Friday, Mar. 7, 2025

MUMBAI – Shares of cement companies are likely to be stable in the coming weeks as price hikes have bottomed out and companies are shifting their focus on building volume growth to meet year-end sales targets, analysts said. After increasing cement prices for three consecutive months till February, much changes are not expected in March, or in fact may reduce their prices during the month. Some analysts are also of the view that price hikes taken are not getting absorbed fully. 

Cement stocks are likely to see an upward momentum when price hikes recover after companies achieve their year-end targets at the end of March, an analyst said. Key triggers for stocks such as Ultratech Cement, J.K. Cement, and Ambuja Cements are on how these companies improve their market presence and realisations, the analyst said.

Though these companies took price hikes to the tune of INR 10-INR 30 in February, some of it had to be rolled back and only INR 10-15 was absorbed due to soft demand, Systematix Institutional Equities said in a report Monday. Moreover, companies' shift to organic growth from consolidation--driven by improved performance, efficiency, and margins--are expected to push cement prices steadily over the medium term, the brokerage said.

Since the end of the December quarter, prices across most regions have increased by 3-4%, supported by a seasonal pick-up in demand. While most regions are targeting a price hike of INR 20-25 per bag, its sustainability remains an overhang, as manufacturers may prioritise volume growth over pricing discipline to meet year-end sales targets, Systematix  said. Additionally, demand could experience a temporary dip in certain regions due to disruptions caused by the Holi festival, the brokerage said.

As per Kotak Institutional Equities' dealer checks, cement prices are steady in the March quarter, given seasonal tailwinds across India, it said in a report last week. Operating leverage, firm prices, and muted costs should aid sequential margin recovery in the March quarter earnings, it said. Market share battle and supply pressure should keep industry margins under pressure in FY26. Ultratech Cement should continue to outperform peers on volumes and margins, Kotak said. It has a 'sell' rating on Shree Cements and The Ramco Cements. 

This week, all cement companies rose, mirroring the rise in the stock market. India Cements rose 17% and gained the most among its sectoral peers. It was the only stock which saw double-digit growth, while ACC rose the least, up nearly 4%. 

TOP HEADLINES
* Dalmia Bharat arm to buy 34.5% in Kilavikulam Rajalakshmi for INR 30 mln
* CCI OKs acquisition of up to 72.8% stake in Orient Cement by Ambuja Cements
* Grasim starts commercial production at paints plant in Mahad, Maharashtra
* Cement cos hike prices in most regions for 3rd month in Feb, says JM Fincl
* Dalmia Bharat arms to add clinker, cement capacities at Pune, Belgaum units

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 Noopur Bhandiwad
Edited by Deepshikha Bhardwaj

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