While the cement sector was under pressure due to increase in input cost, companies have reduced prices in May due to sudden fall in demand.
Best Cement Stocks: For the past few days, there has been pressure on cement stocks and they have been underperformers. While the sector was under pressure due to increase in input cost, companies have reduced prices in May due to sudden fall in demand. Demand has also weakened due to high commodity prices, high temperature and some region issues. However, the brokerage house is confident that the demand will pick up again in the sector going forward. Fall in steel prices may increase construction activity. At the same time, the way the government is focused on the infra sector, the cement sector will also get the benefit of recovery in real estate.
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Real estate will get the benefit of recovery
According to the report of brokerage house Motilal Oswal, cement stocks have seen pressure for the last few days. Stocks were under pressure due to increase in input cost, weakness in demand from retail segment, concern over higher capacity addition. However, it is expected that with the government’s continued focus on the infrastructure sector, demand will improve going forward. At the same time, the sector will also get the benefit of recovery in real estate. The brokerage house has placed Ultratech Cement, ACC and Birla Corp in its top picks.
Pan India prices reduced
According to a report by brokerage house Emkay Global, the average pan India price in May declined by 2 per cent (Rs 10/bag) on a monthly basis, while it increased by 5 per cent on a year-on-year basis. Lower demand and excise duty cut on fuel affected prices. Prices have come down in almost all the regions on a monthly basis. Industry volumes are also expected to decline in the mid to high single digits due to higher commodity prices, higher temperatures and some region issues.
Construction activities will accelerate
However, the industry expects cement demand to improve with further pick-up in construction activities following the recent fall in steel prices. Companies have announced an increase in prices by Rs 15-20 per bag in June. Although it seems that the current prices remain stable, for this it has been announced. The brokerage has included Ultratech, Shree Cement, Birla Corp and Sagar Cement in its top picks.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)