Cement Stocks Outlook for the week – 25 to 29.01.2016
In
thin band with weak bias; UltraTech eyed
( www.rupeedesk.in )
Stocks
of cement manufacturing companies are seen trading in a narrow range next
week,
with the bias likely to be negative owing to persistently weak demand for the
building
material. Barring green shoots in some regions and select verticals such as
road
projects, any recovery in cement sector demand has largely been elusive.
Pricing
aggression
among players has increased, leading to frequent price disruptions.
While
softening of commodity prices has brought partial respite, the pressure on
profitability
of cement makers is likely to sustain in the near term till pricing
rationality
and growth visibility return. Amid the gloom in the larger cement sector,
UltraTech
Cement remains analysts' favourite stock. On Wednesday, the company
reported
a 36.5% year-on-year rise in Oct-Dec net profit to 5.45 bln rupees, beating
the
expectation of a 14% rise, led by a fall in the cost of power and fuel.
The
company's consolidated net sales for the period rose 4.74% to 61.08 bln rupees,
as
against the expectation of 58.8 bln rupees. UltraTech's cost is expected to
fall
further,
given the recent fall in pet coke prices and the scope for the company to
increase
its consumption and expected freight benefits from two more split grinding
units
of 1.6 mln tn per annum each from Jan-Mar. While UltraTech's cement
realisations
fell 4% sequentially and currently remain weak.