Cement Stocks Outlook for the week – 08 to 12.02.2016
(Seen
rangebound; ACC, Ambuja earnings eyed)
Shares
of cement manufacturing companies are seen rangebound next
week
with a negative bias on persistently poor demand for the building
material
across large parts of the country, and weak Oct-Dec earnings.
Investors
are awaiting the Oct-Dec earnings of ACC and Ambuja
Cements,
scheduled for Wednesday, to take a more informed call on
cement
stocks.
Thus
far, cement companies' earnings have largely been below
expectations,
especially on the bottomline and operating margin front, as
they
cut prices in a bid to increase sales and maintain market share.
India Ratings and Research expects cement demand to grow between 4%
and
6% in 2016-17 (Apr-Mar). The expectation is on the back of a
slightly
better demand from the construction and infrastructure segments
led
by government spending. However, since any significant revival in
housing
demand in rural or urban areas is unlikely, the overall cement
demand
growth will be in a mid-single digit.
UltraTech's
Oct-Dec earnings were above market estimates. The
company
would benefit from expanded capacity and a more extensive
presence
across the country. The stock has corrected from its recent peak
and
largely factors in a subdued demand scenario.