Systematix, a financial services company, is predicting a strong Q4 performance for the cement industry, driven by demand-led growth. According to their analysis, the sector is likely to experience a resurgence in the fourth quarter, fueled by a combination of factors including an uptick in infrastructure spending, government initiatives, and a revival in the real estate sector.
Systematix highlights that cement prices are expected to continue their upward trend, driven by increased demand and tight supply conditions. This, coupled with a likely recovery in the steel sector, will further boost cement demand. The company believes that the industry’s profitability will improve significantly in Q4, driven by a surge in volumes and higher realizations.
Among the cement players, Systematix has identified Ambuja Cements as one of its top picks. The company expects Ambuja Cements to benefit from its strong presence in the North and East regions, which are likely to see increased demand due to the cancellation of licenses for large-scale industrial projects in these areas. Systematix also points out that Ambuja Cements has a strong track record of efficiency improvements and cost control, which will help the company maintain its profitability.
Other factors that Systematix believes will support the cement industry’s performance in Q4 include:
* Increased focus on infrastructure development: The government’s emphasis on infrastructure development, including the Delhi-Mumbai Industrial Corridor and the Amaravati-Capital City project, is expected to boost demand for cement.
* Revival in the real estate sector: The recent decline in property prices and interest rates has led to an increase in demand for housing and commercial spaces, which will translate into higher cement demand.
* Tight supply conditions: The country’s cement capacity is expected to remain tight in the near term, leading to higher prices and improved profitability for cement companies.
In conclusion, Systematix is bullish on the cement industry’s Q4 performance, driven by demand-led growth and favorable industry trends. Ambuja Cements is one of the company’s top picks, given its strong presence in key markets and its track record of profitability.