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Informist, Friday, May 30, 2025

MUMBAI — Shares of cement companies are expected to move in a range with a positive bias next week, supported by demand from pre-monsoon construction activity and hopes of price hikes, particularly in the northern and southern regions. However, gains are likely to be capped owing to high stock valuations.

There is a possibility of further price hikes next week, aimed at stabilising rates before the monsoon, which generally leads to weak demand for cement. However, the sustainability of these hikes is still in doubt, as seen in May, when price hikes failed to hold, analysts said.

According to an analyst at a domestic brokerage, cement prices are likely to remain flat until the second half of the current financial year. Earnings results from companies such as JK Cement and JK Lakshmi Cement for the latest quarter showed strong volume growth, improved realisations, and better-than-expected earnings before interest, tax, depreciation and amortisation or EBITDA per tonne performance. These factors could support short-term investor sentiment, the analyst said.

Still, there are risks, especially from a rise in raw materials prices of coal and pet coke. Kotak Institutional Equities earlier this week warned that valuations are high. "Both the buy-side and sell-side seem to be fairly comfortable with the high multiples of the cement sector... We find the multiples completely bereft of logic and disconnected from any first-principle valuation framework," Kotak Equities said in a report Monday.

While valuations are high, the outlook for the cement sector in the long term is positive. Moody's expects cement demand in India to grow 6–7% per year until 2030, mainly due to demand from housing, infrastructure, and urban development. India's cement production capacity is expected to increase by a third over the next five years, driven by major players such as UltraTech Cement and Ambuja Cements, Moody's said in a report Monday. While leading companies are expected to add 200 million tonnes of new capacity over five years, the top two producers will account for 30% of the capacity addition, the report said.

TOP HEADLINES
* SC stays tax dept's reassessment proceedings against Dalmia Bharat, two arms
* Shree Cement gets demand order of INR 5.89 bln from income tax authority
* Dalmia Bharat board to Fri mull raising of funds
* Dalmia Bharat, arms move SC against income tax dept reassessment proceedings
* Rajasthan foray in mind, Star Cement plans to bag more limestone mines
* UltraTech, Ambuja Cements to lead cement capacity addition in India: Moody's
* JK Cement Jan-Mar PAT rises 77% on year to INR 4.17 billion
* IPO Alert: Kanodia Cement files DRHP with OFS of up to 14.91 mln shares
* Analyst Concall: Grasim aims double-digit mkt shr for Birla Opus paints FY26

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 Ishaan Sharma
Edited by Saji George Titus

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