GOLDEN RULES FOR TRADING

Cement Stocks Outlook for the week – 02 to 06.11.2015 Sideways movement seen in consolidation phase

Cement Stocks Outlook for the week – 02 to 06.11.2015
Sideways movement seen in consolidation phase
  www.rupeedesk.in )

Stocks of major cement manufacturers are seen trading sideways next week as demand
scenario for the sector remains dull, and a phase of consolidation is likely.

Cement manufacturers have witnessed a fall in demand over the past few months with
activity in the infrastructure sector not showing signs of a rebound. The cement industry
is seen back in the positive only by Jan-Mar. The market would also keep an eye on the
Jul-Sep earnings of India Cements Ltd, due for Monday, while also waiting for financial
results of Prism Cement Ltd and Ramco Cements Ltd, scheduled for Tuesday and Friday,
respectively.

India Cements is seen reporting net profit of 344 mln rupees for the quarter, up almost
five-fold from 74.90 mln rupees a year ago, owing to improvement in operational
performance and firm pricing of products in the southern markets. We pegs the
company's net sales at 10.91 bln rupees, down 4% on year, as muted demand is likely to
result in weak volume growth during the quarter. We see the company's sales volume at
2.14-2.15 mln tn as compared with 2.35 mln tn a year ago.

We expect better profitability from southern players given there was only mild correction
in prices in the south. But, volumes again will be disappointing. India Cements' counter is
seen trading with a minor positive bias during the week, unless the results have a
deviation of over 10% from expectations, in which case it is seen moving in line with the
numbers.

Cement companies typically see a weak quarter in Jul-Sep as monsoon keeps demand
subdued, and this year the added hit of a slowdown in the infrastructure sector has been
detrimental for the industry.