Cement Stocks
Outlook for the week – 27 to 30.01.2015
( www.rupeedesk.in )
UltraTech Cement and Jaiprakash
Associates are seen in focus next week because of the deal
signed by them under which the
former will buy two of the latter's cement plants in Madhya
Pradesh. The four-day trading
week will also start with reaction to UltraTech Cement's Oct-Dec
earnings announcement.
UltraTech Cement's earnings
usually set the tone for what to expect from other cement
companies. In this case, the
results could be a mixed bag. UltraTech Cement yesterday posted a
1.46% on-year drop in its Oct-Dec
standalone net profit at 3.64 bln rupees, weighed down by
high interest cost on account of
debt raised for an earlier acquisition of Jaiprakash Associates'
Gujarat plant. The market had
expected the company's profit after tax to rise 15% on year in Oct-
Dec.
Yesterday, UltraTech also
announced that it will issue non-convertible debentures of 45.37 bln
rupees and non-convertible
cumulative redeemable preference shares of 1 mln rupees to
Jaiprakash Associates to buy its
4.9 mln tn per year cement grinding capacity in Madhya
Pradesh. The Aditya Birla group
company will also take on its books debt and working capital of
7.87 bln rupees as part of the
deal.
While strong earnings growth is
predicted for Ambuja Cement and India Cement, ACC will
continue to report drab earnings
with little cheer on the volume or realisation fronts. Fuel and
freight costs may continue to
offer a cushion for most cement companies as the benefit of
declining prices of imported coal
and lower freight costs trickles into the cost structure of companies.
