Shree Cement on Monday said that the company will announce some price cuts across the country later in the day, a week after the Adani Group agreed to buy Swiss building materials maker Holcim's stake in Ambuja Cements and ACC for $10.5 billion ( Rs 80,000 crore).
"Today we have we will be announcing some price cut. Definitely in all regions. We don't know about other companies. But today is Monday morning, Monday morning we have to wait and then keep our business in the normal way," said HM Bangur, managing director of Shree Cement, in an interview with CNBC-TV18.
The company on Saturday reported a 16 percent on-year decline in the standalone net profit to Rs 645 crore for the March quarter. The profit, however, increased by 31 percent on a sequential basis. Standalone revenues came in at Rs 4,099 crore, up 3.6 percent on-year and 15.4 percent Q-o-Q.
The stock was trading 0.55 percent lower on Monday at Rs 21,890.75 per share around 12:30 pm.
Motilal Oswal has maintained a Neutral rating on the stock and reduced the target price to Rs 23,740 from Rs 26,215 earlier on the back of below-estimate earnings. "We maintain our Neutral rating on reducing
cost benefits v/s its peers," it said.
|Financial Snapshot (INR b) by Motilal Oswal|
|EBITDA Margin (%)||25.5||21.4||26.0|
|Cons. Adj. EPS (INR)||658.7||522.3||652.1|
|EPS Gr. (%)||2.8||-20.7||24.9|
The Holcim deal — one of the largest acquisitions by an Indian group — makes Adani Group the second-largest cement maker in the country after Aditya Birla Group’s UltraTech Cement.
However, Bangur doesn't think Adani will be aggressive on the pricing front though the deal would increase competition in the market.
"Adani has come and they have definitely... They will be able to have lots of synergies with their existing infra business. So, the competition should be a little better or tough, I will say whatever way you look at it. There will not be any changes in prices. We have to wait for six months before we can decide how the markets will move further," he said, adding that it won't impact supply dynamics in the market.
Bangur expects the demand to improve in the next few months and says the cement industry will pass the entire benefit of lower fuel costs to consumers.
Global real estate services company Colliers says developers have been under pressure to raise prices as cost of construction materials has seen a double-digit surge in recent times and the government’s intervention to control the rise by rationalising duties will benefit the end consumers.
"In this scenario, the government’s intervention to control this rise by rationalizing duties and taxes on key inputs is timely and is likely to have a positive trickledown effect to the end consumers," said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
First Published: IST