Cement Sector Demand continues to remain sluggish ::Emkay

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Cement Sector

Demand continues to remain sluggish

n     Dispatches of majors indicate demand continues to remain sluggish- Top 4 post growth of 0.6% for May. ACC +13.7% yoy (low base), Ambuja disappoints with decline of 6.6% yoy

n     Acute labor shortage across regions impact construction activities. State elections also impacts offtake. Price hikes announced in May not absorbed by market

n     Remain concerned on demand growth as sustainability of current prices depends purely on pick up in construction activities. Increasing costs to put pressure on profitability

n     Maintain our neutral stance on the sector. REDUCE ratings on Ambuja Cement & Ultratech Cement. Prefer ACC and Grasim 

Company	Reco	CMP (Rs)	TP (Rs)
ACC	Hold	1,043	1,140
Ambuja Cements	Reduce	143	140
Grasim Industries	Accumulate	2,439	2,672
Ultratech Cement	Reduce	1,036	1,050
India Cements	Hold	86	93
Madras Cements	Accumulate	92	100
Orient Paper	Buy	60	74
Shree Cements	Accumulate	1,809	1,960