Shares of south-focused Sagar Cements Ltd hit a brand new 52-week excessive of Rs317 on the Nationwide Inventory Change on Tuesday. Nonetheless, buyers selected to ebook income within the inventory, with shares of the corporate tumbling greater than 4% in Wednesday’s opening offers.
Analysts say sentiment for the inventory might have turned due to moderating cement costs within the firm’s key markets in July. Andhra Pradesh/Telangana account for around 60% of it is gross sales adopted by Tamil Nadu and Karnataka, which contribute 16% and 9%, respectively, to total gross sales.
Seller channel checks by JM Monetary Institutional Securities Ltd confirmed that common cement costs witnessed a decline of two% month-on-month in July with the onset of monsoons. The moderation in costs was primarily led by a decline in jap India, which noticed a month-on-month decline of 5.5%, and south the place costs fell 3.4% sequentially. At an all-India degree, cement costs fell to Rs368/bag in July from Rs376/bag in June. One cement bag weighs 50 kilograms.
The September quarter is seasonally weak for the cement sector on the condition that the interval witnesses monsoon rains. So, cement costs may see an extra correction, analysts have cautioned.
Within the backdrop of elevated enter prices, correction in cement value would imply decrease realizations and consequently contraction in working margins.
Within the put-up June quarter earnings convention name, the administration of Sagar Cement had mentioned they anticipate additional value improvement Rs100/tonne in Q2 in energy & gas as a consequence of the sharp improvement in gas costs. General, prices are anticipated to rise one other Rs150/tonne sequentially, taking gas, freight, and different prices altogether.