Cement Stocks Outlook for the week – 29.05.2017 to 02.06.2017
Cement Stocks Outlook for the week – 29.05.2017 to 02.06.2017
( www.rupeedesk.in )
Stocks of cement companies are seen range-bound next week as recent price cuts by these companies are seen weighing on sentiment. Cement companies, which had hiked prices in March and April due to a recovery in demand after demonetisation, cut prices in May as the recovery in demand has been slower than expected. Cogencis had reported last week that ACC Ltd, Ambuja Cements Ltd, and UltraTech Cement Ltd cut prices by 10-20 rupees per 50-kg bag in the Delhi-National Capital Region in May. Demand had slowed in May, which led companies to undertake price cuts. Demand for cement had been hit by the government's decision to withdraw old 500- and 1,000-rupee currency notes from circulation from Nov 9. However, as the availability of currency notes in circulation improved, cement companies started hiking prices across India. In April, ratings agency ICRA said in a report that cement prices had reached pre-demonetisation levels. However, the recent price cuts have raised doubts on the pace of recovery in the sector. Analysts, however, are positive about the cement sector, as they see higher spending by central and state governments on infrastructure. The government's decision to give infrastructure status to affordable housing in the Union Budget for 2016-17 (Apr-Mar) is also likely to boost demand. The cement industry is also seen gaining from the implementation of the goods and services tax, which is likely to come into effect from Jul 1. While the 28% tax rate under the goods and services tax regime is seen as neutral for the cement sector, lowering of tax on coal to 5% from around 11% is seen positive, as it would reduce input costs for cement companies.
Source : Cogencis Information Services Ltd.
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Cement Stocks Outlook for the week – 29.05.2017 to 02.06.2017
( www.rupeedesk.in )
Stocks of cement companies are seen range-bound next week as recent price cuts by these companies are seen weighing on sentiment. Cement companies, which had hiked prices in March and April due to a recovery in demand after demonetisation, cut prices in May as the recovery in demand has been slower than expected. Cogencis had reported last week that ACC Ltd, Ambuja Cements Ltd, and UltraTech Cement Ltd cut prices by 10-20 rupees per 50-kg bag in the Delhi-National Capital Region in May. Demand had slowed in May, which led companies to undertake price cuts. Demand for cement had been hit by the government's decision to withdraw old 500- and 1,000-rupee currency notes from circulation from Nov 9. However, as the availability of currency notes in circulation improved, cement companies started hiking prices across India. In April, ratings agency ICRA said in a report that cement prices had reached pre-demonetisation levels. However, the recent price cuts have raised doubts on the pace of recovery in the sector. Analysts, however, are positive about the cement sector, as they see higher spending by central and state governments on infrastructure. The government's decision to give infrastructure status to affordable housing in the Union Budget for 2016-17 (Apr-Mar) is also likely to boost demand. The cement industry is also seen gaining from the implementation of the goods and services tax, which is likely to come into effect from Jul 1. While the 28% tax rate under the goods and services tax regime is seen as neutral for the cement sector, lowering of tax on coal to 5% from around 11% is seen positive, as it would reduce input costs for cement companies.
Source : Cogencis Information Services Ltd.
