Religare optimistic on cement sector

Religare optimistic on cement sector

Market experts at Religare are expecting a growth in cement sector on the back of supply shortage (due to the closure of Binani's plant in Rajasthan) and some demand uptick MoM. Cement prices went up by Rs 20-70/bag across multiple markets during February. Research done by the firm predicts that the resolution of the issue around the Binani plant closure and an unfavourable SC verdict on sand mining in Rajasthan may lead to some pressure on pricing,

According to the report, cement players should be able to offset cost pressures and report an improvement of at least Rs 100-300 in their EBITDA/t (except south-based players). SRCM and JKLC stand to gain most from these price hikes. Major large-caps are trading at levels similar to that in 2010 and the downside is limited from here on. Any positive news in the sector may push the trend past the tipping point and lead to sustained upward movement. Religare advises investors to keep the cement sector under close observation.

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