The fall in coal/pet-coke and diesel prices from their peak is expected to benefit the companies in the forthcoming quarter. Further, busy season surcharge withdrawal and axle load norms relaxation will benefit the cement players going forward.
Prism Johnson, Orient Cement and India Cements have surged 5% to 13% on BSE in the intra-day trade. Ambuja Cement, Shree Cement, Ramco Cement, ACC, JK Cement, JK Lakshmi Cement and Ultratech Cement were up 2% to 3%, as compared to 0.32% rise in the S&P BSE Sensex.
The infrastructure segment should continue to be the key demand driver, coupled with the prospective revival in rural housing. A normal monsoon and minimum support price (MSP) hike for agricultural produce should boost rural purchasing power in this fiscal.
Going ahead, analysts at YES Securities strongly believe that higher infrastructure investments should sustain with irrigation and industrial projects, metros and roads generating significant cement demand.
“We reckon that implementation of marquee projects like Bharatmala, Sagarmala, Delhi-Mumbai Industrial Corridor project, development of 100 smart cities, Mumbai-Ahmedabad bullet train, construction of Kaleshwaram irrigation project, and development of Amaravati capital city over the next 5-10 years should generate a major chunk of incremental demand. Overall, we expect cement demand in India to grow by around 7.6% over FY18-FY21E from 297 MT to 370 MT,” brokerage firm said in sector update.
According to JM Financial Institutional Securities, “Cement production growth continued to be strong in Sep’18 at 12% YoY, on the back of increased demand from infrastructure segment and partially on the lower base. The shift in the sales from trade (retail) to the non-trade (institutional) segment has led to muted realisation for the companies in Q2. Though the prices have remained stable, the costs (fuel and freight) have come off from the peak and the positive impact will be visible from Q4.”
|GUJ. SIDHEE CEM.||26.70||24.35||9.65|
|J K CEMENTS||755.00||730.30||3.38|
|THE RAMCO CEMENT||660.05||641.70||2.86|
|JK LAKSHMI CEM.||286.00||279.60||2.29|