Binod Modi, senior cement research analyst at Reliance Securities is of the clear view that demand for cement in December has been good compared to November on back of pickup in some of the large infra projects post clearance from government.
“There are certain projects which have started driving demand overall. Moreover, after favourable monsoon and completion of sowing season, rural demand is picking up. So that’s the key reason that cement companies know that if they take a price hikes hereon then it might get sustained going forward.”
"Cement price hikes have started happening from the month of January," he said in an interview with CNBC-TV18. Prices have already increased in Andhra Pradesh, Telangana from the beginning of January by about Rs 30 and they are planning to increase by about Rs 20 per bag from January 16-17,” he added.
“Unlike expectations prices remained under pressure in third quarter. So in Q3, on all India level basis, prices corrected sequentially by about 3-3.5 percent. There was sharp price corrections in regions like eastern, western and southern parts, while in northern and central regions corrections were moderate,” he added.
Therefore, it was the need of the hour for cement industry overall to take a price hike, especially, for Andhra Pradesh, Telangana and other southern regions, he said. "
With regards to stock picks, Modi said, “EBITDA per tonne wise there would be marginal reduction for cement companies compared to previous quarter but it will continue to remain in 4-digits for key cement companies like UltraTech Cement, Shree Cement and these companies should continue to report descent numbers.”
The house is upbeat on UltraTech and ACC, he added. From the midcaps, they like JK Cement, he said, adding that the company should continue to report decent numbers.
First Published: IST