Cement Stocks Outlook for the week – 20 to 22.10.2014
( www.rupeedesk.in )
We
expect stocks of major cement companies to trade with a positive bias next
week on
expectations that they will post good set of earnings for Jul-Sep. UltraTech
Cement,
which will the first of the sector to detail earnings for the quarter, will be
in
focus
during the week. It will declare its result today. The company is seen posting
a 37%
on-year increase in its Jul-Sep net profit to 3.61 bln rupees due to
improvement
sales volumes. Net sales are seen at 51.25 bln rupees, up 14% onyear.
Profitability
of cement companies is likely to increase by 166 rupees per tn
year-on-year
to 665 rupees per tn due to flattish realizations and negative
operating
leverage. Barring freight, other commodity price trends highlight no
inflationary
pressure on variable costs.
It said
recovery in cement demand continued in Jul-Sep, though it remained a bit
subdued
on a quarter-on-quarter basis due to the monsoon. Taking a cue from the
strong
industrial output data on cement production, we expect demand to grow at 6.3%
YoY (decline 8.5% QoQ) in 2QFY15 (Jul-Sep).
