Undercurrents In Cement Industry; Stick To Fundamentals Says Nirmal Bang

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Nirmal Bang Report.It is clear that the recent capex announcements by the major cement companies are a response to an enhanced diversified portfolio and an increasing adherence to ESG standards. We expect cement industry’s capacity growth, assuming some delays/deferments, at 5-6% during FY23 – FY25. Historically, the cement industry has grown at a compound annual growth rate of ~5% over the past 10 years (i.e., from ~335 million tonne in FY12 to over ~555 mt in FY22). Five major players (controlling ~49% capacity share) have announced aggressive capex plans, but the industry’s capacity utilisation is unlikely to improve despite better demand outlook. This, in our view, will lead to fresh rounds of consolidation in the cement industry, especially among the mid-sized and small-sized companies with high-cost structures and bloated balance sheets. The near-term cost headwinds have already put pressure on margins as companies are unable to pass on the rising costs due to moderation in demand. Management reshuffle has led to the cement sector underperforming among the broader markets. Although the demand outlook is likely to remain healthy in the foreseeable future, we believe that the recent stock price corrections offer good entry points for accumulating quality cement companies that have healthy balance sheets and long-term growth prospects despite near-term challenge..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Undercurrents In Cement Industry; Stick To Fundamentals Says Nirmal Bang

We believe that the recent stock price corrections offer good entry points for accumulating quality cement companies.

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