CEMENT Steady Pricing - CLSA Recos

[resh]

CLSA in a note on Indian Cement Stocks said,

With exit prices higher, 1QFY20 seems like a blockbuster, but our checks suggest higher discounts in the last two weeks due to weak construction activity. With elections behind, a clear picture should now emerge. We upgrade Dalmia from O-PF to BUY with a target price of Rs1,500 (was Rs1,300) and raise India Cements’ target price to Rs135 (was Rs115) while retaining BUY; we are still positive on Ramco, UltraTech and ACC.

[Amol]

As per DIPP (Department of Industrial Policy and Promotion) data, industry volumes increased by 11% year-on-year to 30 million tonnes in January 2019. From April 2018-January 2019, cement production volumes increased by 14% to 276 million tonnes. Management narratives indicate strong demand from the infrastructure sector even though demand from the trade segment is relatively subdued.