Earnings downgrade in Q3 likely for cement cos: Religare

Talking about the outlook for cement sector going forward, Mihir Jhaveri of Religare Capital Markets, says earnings downgrade are likely for companies in third quarter on back of subdued demand, lower prices, poor volume growth. However, fourth quarter could see cost benefits flowing in.Across India there has been correction in prices in the west, central, eastern and northern markets and demand to is feeble. So, Q3 will see a 2-3 percent decline in prices. In north prices have corrected sharply by Rs 50-70 per bag but south has been mixed with Andhra Pradesh seeing a price hike, while Tamil Nadu and Kerala saw a drop.Volume growth too for most of the companies is expected to be in single digits, October was the only aberration which saw a double-digit growth for largecap companies but November again was negative and December too could be subdued. However, companies that have expanded capacities like Shree Cement, JKLC could see better volume growth for the quarter.From a demand perspective there has been a pressure from supply side as well, especially in the western market that is Gujarat from Rajasthan and capacity addition by Sanghi Industries. So quarter on quarter one can see higher declines in west and east regions compared to north, south regions.Stock specific, the house is more upbeat on UltraTech than ACC.For detailed discussion, watch video.