Cement stocks rise; UltraTech, ACC gain 3%, Ambuja Cements hits 52-wk high

Analysts at IDBI Capital expect cement industry volume to decline by 15 per cent year-on-year (YoY) in Q2FY21.
Shares of cement manufacturers were in focus, gaining up to 4 per cent on the BSE on Wednesday on the expectation of improved demand from the urban market and in infrastructure in the coming days due to relaxation of lockdown measures.

Ambuja Cements hit a 52-week high of Rs 234.25, up 4 per cent on the BSE. The company said the board of directors of the company is scheduled to meet on October 22, 2020, to consider the unaudited financial results for the third quarter ended September 30, 2020 (Q3) of the corporate financial year 2020.

UltraTech Cement, ACC, Shree Cement, Dalmia Bharat, India Cements, and Orient Cement were up 1 per cent to 4 per cent. In comparison, the S&P BSE Sensex was up 0.60 per cent at 39,811 points at 11:42 am.

The cement industry demand is slowly improving from the disruption created from Covid-19 due to pent up demand and improved rural demand.

Analysts at Emkay Global Financial Services remain positive on the cement sector and expects industry volume to start improving from the January-March quarter (Q4FY21). Demand recovery in North, Central, and East regions surprised positively after easing of the lockdown norms and there should be a gradual improvement in demand in South/Maharashtra markets. The brokerage firm expects cement prices to improve after the monsoon season.

Meanwhile, analysts at IDBI Capital expect cement industry volume to decline by 15 per cent year-on-year (YoY) in Q2FY21. Post June-20, the decline in the cement volume has increased as pent up demand has faded and monsoon has set in. Average Cement prices at an all India level has declined by 2 per cent quarter-on-quarter (QoQ) and region-wise barring south, and other region has witnessed a decline in cement prices in Q2FY21, the brokerage firm said in an earnings preview.

We would watch for management commentary on cement sales volume expectation for October-March (H2FY21) in the non-trade and trade segment and sector-wise outlook and new opportunity for sales volume, it said.

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