Aug 27, 2013, 03.15 PM IST
ICICIdirect.com has come out with its montly cement sector update for August 2013. The research firm remains neutral on large caps like Ambuja Cements and UltraTech Cement. However, remains positive on select midcap companies due to attractive valuations on an EV/tonne basis.
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ICICIdirect remains neutral Ambuja, UltraTech Cement
ICICIdirect.com has come out with its montly cement sector update for August 2013. The research firm remains neutral on large caps like Ambuja Cements and UltraTech Cement. However, remains positive on select midcap companies due to attractive valuations on an EV/tonne basis.
Like this story, share it with millions of investors on M3
ICICIdirect remains neutral Ambuja, UltraTech Cement
ICICIdirect.com has come out with its montly cement sector update for August 2013. The research firm remains neutral on large caps like Ambuja Cements and UltraTech Cement. However, remains positive on select midcap companies due to attractive valuations on an EV/tonne basis.
"All-India cement prices declined consecutively for the second month in August after reaching a yearly high of Rs 308/bag in June. All-India average price settled at Rs 293/bag in August vs. Rs 300/bag in July. North markets continued their subdued performance in the month where prices fell by Rs 15/bag after falling Rs 12/bag a month ago. The other region, which led the price fall was the central region where prices fell by Rs 14/bag taking the region's average price to Rs 270/bag. The eastern region saw prices falling by Rs 5/bag to Rs 323. Prices across cities in the southern region increased except for Hyderabad, which witnessed a steep fall in prices. Demand was further down on the back of the all-India ban on sand mining and other regional issues like the Telangana issue in Hyderabad, excess monsoon in eastern states, etc. With this downward pricing trend, all-India average cement prices stood at Rs 293/bag, a fall of ~Rs 7/bag MoM. On a YoY basis, prices are down Rs 6/bag. According to dealers, prices are expected to come down further to the tune of Rs 5-10 as the industry scenario is not in favour of current prices."
"All-India cement dispatch growth for Q1FY14 remained tepid due to sluggish demand from the housing and infra segments on account of key issues like rising cost of capital, land acquisition & clearances and unavailability of key raw materials like coal for the manufacturing industry. Also, government led demand push growth remained muted. The operating environment continues to remain challenging for the sector both in terms of poor demand and high cost structure. We believe the premium valuations of a few large cap cement companies like Ambuja and UltraTech are unjustified given the present situation. However, the higher replacement costs and market leadership of these companies are keeping them at rich valuations. Hence, we remain neutral on large caps like Ambuja Cements and UltraTech Cement . We remain positive on select midcap companies due to attractive valuations on an EV/tonne basis," says ICICIdirect.com research report.
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To read the full report click here
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