Outlook: December should see some pricing gains, especially as sand supply shortages ease; owever temporarily. Cement makers typically try for higher December exit prices, as we head into the peak Jan-March quarter. Cost pressure continues to increase with railway´s peak season surcharge (+15% vs 2QFY14) and diesel price hikes. Profitability of cement companies may not improve much from 2QFY14 numbers, which saw EBITDA/t decline to Rs 400-700 range.
View: Large cap valuations remain expensive and seem to be building in a large positive swing in FY15. As such, risks remain towards the downside. The south remains inherently unstable due to ongoing uncertainty in AP.