Cement Companies to Face the Heat from Rising Raw Material Prices
Power & fuel cost which comprise of around 17-19% of the overall net revenues of cement companies are on the rise. This could possibly dent the operating margins of cement companies.
Fuel costs would increase mainly on the back of rise in import duties on pet-coke. Import duties on pet-coke have increased to 10% from 2.5%. Cement companies usually import pet-coke as it is cheaper as compared to procuring the same from domestic market.
Not only this, coal prices have risen by 44% in the first half of the current fiscal. Rise in crude prices could also lead to a spurt in the freight costs.
The interesting part to observe now is whether the cement companies pass on these additional costs to their clients. The outlook for cement demand in the second half of the current fiscal is not that encouraging. Considering this, the cement companies would face difficulties in passing on the extra costs to their clients, which could dent their margins.
Greaves Cotton to Manufacture BS VI Engines for Piaggio
As per an article in leading financial daily, Greaves Cotton has entered into an agreement with Piaggio to develop new diesel engine which would meet the BS VI requirements. Reportedly, Greaves Cotton has a 78% market share in the diesel driven three-wheeler market.
The stock has risen by 19% in a span of one month. You can get a detailed analysis of the latest quarterly update on the stock by clicking here (subscription required).
Extension of Jute Packaging Norms to Benefit Jute Manufacturers
The extension of jute packaging norms led to a rally in stocks of jute manufacturers. The Cabinet Committee on Economic Affairs extended the packaging norms under the Jute Packaging Material stating that 90% of the food grains and 20% of the sugar products shall be mandatorily packed in the jute bags.
The news led to a rally in stocks of Cheviot and Ludlow Jute & Specialities Ltd which surged by 9.5% and 20% respectively in yesterday’s trade.
