Cement - Expect Further Price Rise - Motilal Oswal

CEMENT: Expect further price increase of Rs5-10/bag in West & East this week; Rs10-30/bag increase in last one month

Cement prices in west and east regions are expected to further increase by Rs5-10/bag by end of this week.

In last one month, prices have increased by Rs10-30/bag, with highest increase in North and Central markets.

Demand is improving across markets as construction activity is picking-up. Demand in few markets (North & East) has been strong in anticipation of price increases.

Supply in most markets (except North & East) is controlled to facilitate price increases.

Although sector would continue to be plagued by over-capacity at least till Dec-11, cement prices are expected to remain buoyant at least till Apr-May'11, driven by seasonality in demand. We expect high volatility in cement prices and cement companies' performance over next 6-9 months. However, we believe we have already witnessed bottom-of-the-cycle utilization. Prefer Ambuja Cement, ACC and JP Associates in large-caps, and Birla Corp and India Cement in mid-caps.

Source : Equity Bulls

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