Cement Stocks Outlook: Choppy next week with positive bias

[K.Karthik Raja]

Cement Stocks Outlook: Choppy next week with positive bias
Friday, Apr 11

Shares of cement companies are seen choppy next week with a
positive bias, tracking broad market movement
The ban on cement exports is unlikely to impact the shares.Export
of the commodity has already been declining as realisations from
domestic market are better
In the year ended Mar 31, domestic cement companies are estimated
to have exported around 3.6 mln tn, compared with over 6 mln tn in
2006-07.
However, fears the government may further target the cement sector
in its bid to tame inflation may limit major gains in these shares,
India's headline inflation rate rose to an over three-year high of
7.41% for the week ended Mar 29 from 7.00% a week earlier.
The government today reiterated scrapping of Duty Entitlement Pass
Book benefit on cement exports, but with falling export volume,
analysts expect this measure also to have negligible impact.
Removal of DEPB benefit effectively means cement companies will
not be able to claim drawback of import duty paid on any raw material
used for manufacturing cement that will be exported.
Some buying, however, is likely to be witnessed in these shares
ahead of Jan-Mar earnings of cement makers . however, unlike
last six quarters, are not optimistic these companies' performance
will be robust.
Rising cost pressure, especially originating from coal prices and
freight charges, is likely to restrict growth in net profit of cement
manufacturers
Among major cement makers, Binani Cement Ltd will detail earnings
for quarter and year ended Mar on Apr 21, Ultratech Cement Apr 22, and
Grasim Industries Apr 29. ACC will also detail its Jan-Mar earnings on
Apr 24.
.
STOCK VIEW
Cement shares are likely to move sideways next week.
Shares of Ambuja Cements are seen finding immediate support at 115
rupees followed by good support at 111 rupees .In the near term, the
stock can touch 122 rupees
ACC is likely to face resistance at 848 rupees, while strong
support for the stock exists at 801 rupees
However, they also added the stock is likely to slip to 770 rupees
if it
breaches the support level at 801 rupees.
In the near term, shares of India Cements are expected to move
between 171 rupees and 193 rupees.
Shares of Ultratech Cement are seen moving towards 850 rupees, but
only after breaching key resistance of 837 rupees.
On any slide, Ultratech shares are likely to find support at 781
rupees
Shares of Grasim Industries are likely to face resistance at 2,640
rupees and find support at 2,420 rupees
They added the stock has potential to touch 2,780 rupees if it
manages to break 2,640-rupee level with solid volume.
.
This week's closing prices, in rupees, of key cement shares on
National Stock Exchange, compared with the previous week:
.
Company Closing price Closing price % Change
Apr 11 Apr 4
.
ACC 814.95 830.85 (-) 1.9%
Grasim Industries 2,550.15 2,543.75 0.2%
Ambuja Cements 117.65 119.15 (-) 1.3%
India Cements 183.85 182.90 0.5%
UltraTech Cement 800.00 805.85 (-) 0.7%
.
Sensex 15807.64 15343.12 3.0%
Nifty 4777.80 4647.00 2.8%

End