The focus of the government has been on the infra sector in the budget. At the same time, this time in the budget, the government has announced to increase the capital expenditure. This can prove to be a booster especially for the infrastructure sector.
Best Infra Stocks: After the budget 2022, once again the stocks of the cement sector are in demand. The focus of the government has been on the infra sector in the budget. At the same time, this time in the budget, the government has announced to increase the capital expenditure. This has been increased to 7.5 lakh crore for the next financial year. Large capex outlay can prove to be a booster especially for the infrastructure sector. Due to this, the order book of companies related to the sector can be strengthened. At present, cement companies are going to get the benefit of strong demand and growth in the infrastructure sector. Expressing confidence in the cement sector, brokerage house Motilal Oswal has said that some cement stocks may outperform going forward.
View positive on the sector
The brokerage house says that there is a positive view on the cement sector. It is expected that the demand for cement will improve further. It is clearly visible in the budget that the focus of the government on the infra sector is increasing. In such a situation, the demand for cement from the real estate sector will be stronger. Cement demand is expected to grow at 3 per cent CAGR during 4QFY19-22. The brokerage also said that based on demand absorption, it is expected that clinker capacity utilization may be 95 per cent in March 2022. This will further support cement prices.
Top Picks: UltraTech Cement, ACC, Dalmia Bharat, Ramco Cements and Birla Corporation
Industry Volume
According to the report, industry volumes have declined by 3-4 per cent year-on-year in January 2022. It is estimated that sales volumes should grow by 4-5 per cent in January 2022 on a monthly basis. The brokerage expects industry volumes to decline 5 per cent year-on-year in 4QFY22. This is possible because of the higher base price last year. Talking about FY22E, it can see 9 percent growth on a yearly basis. Whereas in FY21 it had declined by 3 per cent.
cement prices hiked
Cement prices had declined in December 2021. However, after this the companies have hiked the price. The average price hike in January 2021 has been 3 per cent on a monthly basis and 5 per cent on a yearly basis. The maximum increase in prices has been seen in the East region. At the same time, prices have increased in other regions as well, which will benefit the sector. The industry has announced to increase prices by Rs 10-20/bag in North and West regions in February. Whereas in East and South the prices will increase by Rs 20-25/bag.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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