Cement Stocks
Outlook for the week – 19 to 23.01.2015
( www.rupeedesk.in )
Recent price hikes by cement
companies and anticipation of another round shortly will fuel
optimism around stocks of cement
companies next week. The rate cut by the Reserve Bank of
India and the trade deficit
narrowing to a 10-month low of $9.4 bln will also create positive
sentiments around cement stocks.
Seeing revival in demand from the
construction sector, major cement companies have raised
prices of the building material
by 10-25 rupees/bag across regions and may effect another round
in some regions if strong demand
persists, sources told Cogencis.
Cement companies had previously
raised rates December-end by a similar range, after a series of
price cuts. The fortunes of
cement companies are closely linked with fundamentals of the
economy and the recent growth
data has been encouraging.
As the government has
demonstrated its no-holds-barred approach when it comes to taking
forward its reforms agenda, and
with the Budget just round the corner, the market is expecting a
huge fillip to the infrastructure
sector. Along with this, the rural housing scheme will also be a
factor that will lead to
expansion in demand.
Mid-cap cement companies stand to
benefit in this up-cycle with higher margin expansion compared to larger players due to
high financial and operating leverages.
