Informist, Thursday, Oct. 31, 2024

MUMBAI - Decline in earnings growth, weak demand, and absence of pricing power are likely to keep gains of cement stocks under check in the near term, analysts tracking the sector said. Most cement companies which have released their quarterly results so far have posted on-year decline in key earnings parameters due to lower volume and realisation, limiting the upward journey of their share prices.

However, these companies anticipate the second half of the financial year to be better as pricing scenarios are seen improving, and more government projects are anticipated. In the last few months, cement companies had hiked their prices, but the impact of which had not kicked in, particularly due to muted demand trends. 

"Big cement players are expecting to grow at an average of 6-7% and small players at an average of 4-5% for FY25 (2024-25)," Ashutosh Murarka, analyst at Choice Equity Broking, said. They are focusing on cost reduction in the next two-three years and may look for more acquisitions to improve pricing, he added. Cement manufacturing players are also looking at increasing their share of rail projects and reducing roads as costs are higher in the latter business. When asked about valuations of cement stocks, Murarka said many are expensive, with the current price-to-earnings ratio for some players around 40-50.

On the earnings front, JK Lakshmi Cement is scheduled to release its September quarter results Wednesday. The company's net profit for the September quarter is expected to halve to INR 419.75 million from a year ago and revenue is seen falling 8% to INR 13.33 billion, according to the average of estimates from right broking firms. The stock closed 0.8% higher at INR 810.20 on the National Stock Exchange. Some of the companies who have released their earnings so far are UltraTech Cement, Ambuja Cements, ACC, and Sagar Cement. The NSE and BSE will hold a Muhurat trading session Friday. The pre-open session will start at 1745 IST and the special live trading session will begin at 1800 IST and end at 1900 IST.

TOP HEADLINES
* Analyst Concall: Ambuja Cement has INR 101 bln cash, may spend it by FY26
* Grasim partners with US-based Circ to accelerate scaling of recycling fibres
* Earnings Review: Ambuja Cements Jul-Sept net falls but beats Street view
* Gujarat Ambuja Jul-Sept net profit falls 16.2% YoY to INR 695.3 million
* JK Cement board OKs subsidiary Toshali Cements' merger with co
* PRESS: Adani group in talks with Odisha govt to build cement factory
* JK Cement Jul-Sept net profit slumps 74.7% on year, revenue down 7%

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 Anjana Therese Antony
Edited by Manisha Baxla

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.