Cement Stocks Outlook for the week (18-22.06.2012)

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Jun 18, 2012, 5:33:00 AM6/18/12
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RUPEE DESK: Cement Stocks Outlook for the week (18-22.06.2012)

 

Stocks of major cement companies are seen taking cues from the broad market next week amid lack of any sector-specific triggers. There are no sector-specific triggers that may have an impact on shares of cement companies next week. There will be an across-the-board upside if the Reserve Bank of India cuts rates in line with street expectations, and that will also benefit cement stocks.


The central bank is scheduled to announce its mid-quarter review of monetary policy on Monday. The RBI is widely expected to cut repo rate by 25 basis points to 7.75%. Many others expect the RBI to cut cash reserve ratio along with repo rate.


The broad market will also track global developments, especially the outcome of elections in Greece, developments at the Group of 20 nations' summit, and US
Federal Open Market Committee meet. Greece elections will be held over the weekend.


Medium-term bias for shares of cement companies remains positive, especially after the top three players in the sector paid higher advance tax for Apr-Jun as against a year ago.


According to sources in the tax department, UltraTech Cement paid 1.10 bln rupees as advance tax in the first quarter of the financial year ending March,
nearly 175% higher than 400 mln rupees a year ago.


Ambuja Cements paid 20% higher tax at 600 mln rupees, and ACC paid 12.5% higher tax at 450 mln rupees. Corporate entities pay 15% of their annual estimated tax liability in Apr-Jun, 30% in Jul-Sep and Oct-Dec each, and the rest by Mar 15.


For the last three quarters, cement makers' advance tax payments have been higher on a year-on-year basis due to a low base effect. Also, cement makers have seen an improvement in pricing and demand since October, and stability in raw material prices over the past three quarters, which have benefited earnings

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