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Informist, Friday, May 16, 2025

MUMBAI — Cement stocks are likely to fall next week as an early onset of monsoon may impact demand for cement. The India Meteorological Department last week said monsoon may begin in Kerala by May 27, earlier by at least a week. High valuations of several companies may also push investors to sell their shares, but a possible decline is likely to be capped as analysts have a positive outlook on the sector in the medium to long term.

Cement prices may fall in the coming months, says Ravi Sodah, a fundamental analyst with Elara Capital, but he also expects them to rise from November. However, Sodah advises against investing in cement companies as stock prices are currently above their long-term averages.

Though there may be near-term pressure due to high valuations, analysts are still positive on the sector over the medium term. Government projects such as Pradhan Mantri Awas Yojana 2.0 and Atal Mission for Rejuvenation and Urban Transformation will help the cement sector grow 8-9% in 2025-26 (Apr-Mar), said Tushar Chaudhari, a research analyst at broking firm Prabhudas Lilladher Pvt. Ltd. Among companies, Shree Cement had said it expects cement volume in the industry to grow 6.5-7.5% in FY26.

Shree Cement reported earnings for the March quarter Wednesday. The company's net profit declined on year as rise in expenses and tax were more than the increase in revenue. The bottom line for the March quarter declined despite the company's revenue coming in at the highest level since at least Oct-Dec of 2014. Analysts had expected Shree Cement to report an on-year decline in its net profit for the quarter due to competitive pricing pressure despite softening input costs.

Several Indian cement makers are likely to increase their capacity significantly over the coming years. UltraTech Cement is expected to increase its capacity to 210.50 million tonnes per annum by FY27 from 183.40 million tonnes per annum at the end of March. "The company's heavy capex programme, covering organic expansion, acquisitions, and the refurbishment of India Cements and Kesoram Industries, signals the company's intent to dominate the cement space," Nomura had said in a report after the company's March quarter earnings.

Among other major players, Ambuja Cement aims to increase its capacity to 118 million tonnes per annum by the end of 2025-26 (Apr-Mar) from over 100 million tonnes per annum as at end of March. Analysts are watchful of how the company ramps up recently acquired assets, controls unit operating costs, and captures market share.

TOP HEADLINES

* Earnings Review: Shree Cement PAT falls as expenses, tax spend rise more

* Shree Cement gets grant order for limestone mines in Jaisalmer

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:

End

Reported by Ishaan Sharma

Edited by Nishant Maher

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