Shares of cement companies are seeing positive movement on December 11, driven by a series of incremental price hikes by dealers. These price adjustments come after a prolonged period of flat margins, which had negatively impacted the profitability of cement manufacturers.
Cement dealers are attributing the recent price hikes to increased demand, particularly from the real estate sector, which is benefiting from improved labour availability following the festive season. Additionally, there has been an uptick in orders from the infrastructure sector, further driving the demand for cement. According to CLSA, cement prices have risen by INR 10-30 per bag across India in December, representing a 3.5 percent hike on a quarterly basis. However, when compared to the same period last year, prices are still down by about five percent. The rise in prices follows a slow period in October, but volumes have begun to recover gradually, especially in the latter half of November. CLSA remains optimistic about the demand rebound in the second half of FY25 and FY26. Among the cement manufacturers, CLSA has identified UltraTech Cement as its top pick, reflecting confidence in the company’s growth potential as the sector stabilises.
At 9:25 AM, UltraTech Cement’s shares were up by 2.4 percent, trading at INR 12,028.8 per share. Other cement stocks also showed positive movement, with ACC and Ambuja Cements, both part of the Adani Group, increasing by 1.86 percent and 1.27 percent, respectively. Dalmia Bharat shares were up by 2.1 percent, priced at INR 1,938 per share. Market analysts predict a four percent price hike in the second half of FY25, based on expected volume recovery and a reduction in operational costs. This sentiment is also echoed by Jefferies, which forecasted a demand recovery in the second half of the fiscal year, with cement companies likely to see volume growth of 8-10 percent. Jefferies also named UltraTech Cement as its top pick in the large-cap segment, while JK Cement was highlighted as its preferred mid-cap stock. With demand picking up and prices recovering, the outlook for the cement sector appears positive, further buoyed by government infrastructure spending and continued strength in the real estate market.
