Informist, Friday, Aug 23, 2024

MUMBAI - Shares of cement companies are expected to remain under pressure in the upcoming week, analysts said. In the short term, price hike is a major trigger for the sector. However, owing to the monsoon season, demand has been weak, pushing expectations of a price hike to October.

Cement companies with a larger presence in south Indian markets plan to raise prices by 20 rupees per 50-kg bag, dealers told Informist. Dealers in Telangana, Andhra Pradesh, Tamil Nadu, and Karnataka confirmed the price hike plans, but said they are yet to pass on the price hike to consumers as demand for the commodity is weak and there is resistance from buyers.

However, analysts believe it will not be successful till demand recovers. "Generally, such price hikes often get rolled back due to weaker demand on account of monsoon, and we expect the same to happen this time as well," Nomura Global Market Research said in a report. The report also said that while dealers remain confident in Bengaluru and Kerala, the brokerage sees the potential of hike absorption as bleak due to the ongoing market share tussle in the southern market.

Despite this, a research analyst covering the sector said a volume growth of 7-8% this year can be expected, and this growth may be in double digit before 2025-26 (Apr-Mar). The analyst was positive on UltraTech Cement and Ambuja Cement as the execution of these companies was better and the upcoming capacity also places them in a better spot for growth compared to peers.

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Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anjali Singh
Edited by Ashish Shirke

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