Ultratech, Ambuja, other cement stocks are gathering as FM Sitharaman hints at GST Review

Shares of cement manufacturers rose as much as 3 percent higher on the BSE during Wednesday’s intraday trading. Stock prices of Ultratech Cement, Ambuja Cements, JK Cements and Ramco Cements rose between 1 and 3 percent on February 8, a day after Finance Minister Nirmala Sitharaman signaled that the government would be willing to introduce a reduction in goods taxes. and services to consider (GST) on cement.

UltraTech Cement, Ambuja Cements, India Cements and HeidelbergCement India each rose 3 percent. ACC, Dalmia Bharat, Star Cement and JK Cement were up 2 percent against the BSE.

During a session with members of the Confederation of Indian Industry (CII) in New Delhi, she assured that she would have the assembly committee look into the existing 28 percent GST rate on cement.

Meanwhile, analysts from Emkay Global Financial Services expect the sector’s profitability to increase by Rs 150-200/ton QoQ in the January-March (Q4FY23) quarter, mainly driven by input cost savings and higher operating leverage. International petcoke prices corrected by >35 percent from their peak (in April-22) at US$175/tonne. Despite a 35-50 percent correction in South African/Australian prices for non-coking coal in recent months, petcoke consumption per Kcal was still 10-15 percent cheaper than coal, the brokerage firm said in an industry update.

Cement companies are trying to implement price hikes of Rs 5-15/bag in various regions in February 2023. The absorption of such increases will be revealed in the coming days, the note added.

While an improvement in margins is expected to be seen from the July-September quarter (Q3FY23), a sustained correction in energy prices would be crucial for further improvement in profitability given the restraints in price increases. Despite the near-term challenges, the outlook for demand is expected to remain strong going forward given the revival of the housing cycle and the increase in government spending on infrastructure projects ahead of the upcoming general election, according to ICICI Securities in the results of the cement sector. example.

According to the foreign brokerage firm Jefferies, a GST cut from 28 percent to 18 percent would mean a price reduction of 7 to 8 percent. It will be a small addition to volumes and positive for mid-term pricing, it noted.

Cement companies suffered from higher fuel costs in 2022, but that is expected to change this year, analysts believe.

Cement demand is expected to improve in the coming quarters due to the Union’s robust budget and upcoming elections, they added. “The 33 percent year-on-year increase in capital expenditures to 3.3 percent of GDP in FY2024 is positive for cement demand growth,” said Kotak Institutional Equities.

disclaimer:Disclaimer: The opinions and investment tips of experts in this News18.com report are their own and not those of the website or its management. Users are advised to contact certified experts before making investment decisions.

Read all the latest business news here