EUR 120.00 For Business Accounts Only

MOSL: Morning India (22/January/20): 1. Cement (Utilization to rise again on improving demand outlook); 2. EcoScope; 3. Hind.Zinc; 4. ICICI Pru Life; 5. Havells India; 6. Info – Edge; 7. Zee Entertainment; 8.

MOrning India (22/January/20):

Today’s top research idea
Cement: Utilization to rise again on improving demand outlook
** In CY19, the Indian Cement sector was plagued with worries related to weakening demand overshadowing pricing-led EBITDA growth.

** We expect five key trends to emerge in CY2020, such as (a) recovery in volume growth to 6% backed by pick-up in spends on infrastructure development (roads, irrigation, metros, etc.), (b) limited clinker expansion, which should help clinker utilization rise to 79%, (c) front-ended price hikes after continuous decline in the past six months, (d) benign costs in 1H on lower petcoke prices, and (e) further sector consolidation (Emami, Murli, Vadraj), which should support prices.

** We prefer companies that (a) have an ability to gain market share, (b) are moving down the cost curve, and (c) provide valuation comfort. Therefore, UltraTech is our top large-cap and JK Cement our top mid-cap pick. We also like ACC as a value pick. We do not see much upside in Shree and Ramco, as their potential market share gains over the next three years is already priced in.

Piping hot news
FM Sitharaman likely to raise stake sales target to ₹1.5 trillion
Finance minister Nirmala Sitharaman is likely to set an even more ambitious disinvestment target of ₹1.5 trillion for the year starting 1 April, mostly because many of the strategic sales planned for the current year, including that of Air India, have been delayed. The strategic disinvestments that are now expected to be completed in the next fiscal include Air India, Bharat Petroleum Corp. Ltd (BPCL), Container Corporation of India Ltd (Concor) and Shipping Corporation of India Ltd (SCI).