Sunny Agrawal predicts strong FY26 for cement sector as profitability improves

“It’s a type of bottom-up inventory pickers market. So, the businesses that are more likely to carry out properly over the interval of subsequent three to 4 quarters are more likely to be on radar of investor,” says Sunny Agrawal, SBI Cap Securities.

It has been a good restoration in April. What do you assume this month has in retailer for us?
Sunny Agrawal: Undoubtedly respectable restoration within the month of April. Once more, what we now have witnessed is that the businesses that are reporting wholesome set of quantity, a minimum of assembly the road estimate and guiding for a good development as far as earnings are involved, these corporations are holding up and, in truth, few largecap corporations are additionally buying and selling near the life excessive.

So, once more, market I really feel has grow to be a really slender and inventory particular market. So, corporations that are more likely to report wholesome set of quantity these corporations are being rewarded and corporations the place there’s a miss as far as the earnings estimates are involved or there’s a type of downgrade when it comes to a development outlook, there we’re seeing road is punishing these corporations.

It’s a type of bottom-up inventory pickers market. So, the businesses that are more likely to carry out properly over the interval of subsequent three to 4 quarters are more likely to be on radar of investor.

A working example Mahindra & Mahindra, yesterday reported a really stellar set of quantity. So, each SUV as properly as tractor phase performing properly.

So, there, we now have seen a type of strong up transfer in the present day and we consider the honest worth of the enterprise is near Rs 3500-3600, so that can proceed.

Among the many PSU financial institution basket, on one hand we now have seen an excellent set of quantity from Indian Financial institution, so there once more, we really feel there’s a worth that lies there buying and selling at 0.9 instances one 12 months ahead worth to e book. So, we really feel the honest worth of Indian Financial institution is near Rs 650.

Then again, in the present day as we’re talking Financial institution of Baroda has reported a barely weaker set of quantity, so spillages have improve and estimates we now have seen a miss, must see whether or not it’s a one-off or whether or not there may be some downside in sure a part of the portfolio.

So, Road is punishing the Financial institution of Baroda. So, once more going ahead I really feel in the end market will gravitate in direction of the businesses that are more likely to report wholesome development.

How is it that you’ve got mapped the incomes season up to now and let me hold it out of this as a result of that, in fact, was a transparent eyesore. However you probably did flag off BOB for occasion proper now. The place is it that you’ve got seen optimistic surprises and the place do you assume the disappointments nonetheless await us?
Sunny Agrawal: Once more, what I really feel is that the outcomes season up to now have been blended bag. So, there isn’t a one structural pattern we’re seeing throughout the sector, like even inside IT pack which is a transparent sector which isn’t appreciated by the road on the present juncture.

So, yesterday, Coforge reported an excellent set of quantity over there backed by the very sturdy deal win, $2.1 billion type of deal win which often a big friends like Infosys and TCS report, that’s a minimum of giving a confidence that the corporate can proceed to report a 15% type of development in FY26.

When you take a look at banking sector, a clearcut outperformance by ICICI Financial institution, HDFC Financial institution. Then again, we now have seen a slight disappointment from likes of Kotak or for that matter Financial institution of Baroda in the present day reported a weaker set of quantity. So, once more, throughout the sector we’re seeing a type of blended bag quantity.

So, it’s extra of inventory particular or bottom-up market up to now. Coming to the sectors which weren’t doing properly, so cement a minimum of we now have seen a sequential enchancment when it comes to profitability.

So, all of the cement gamers are reporting a good Q-on-Q enchancment in ebitda per tonne metric, so on that base we really feel that going ahead that’s in FY26 the business can report a 6% to eight% type of quantity development and backed by the latest worth hike taken by all of the cement majors we really feel the profitability can additional inch up over the interval of subsequent three to 4 quarters.

So, cement, the pattern has been comparable throughout all the businesses, many of the corporations have reported sequential enchancment in profitability and that’s more likely to proceed in FY26. So, sure, coming to auto, once more, it has been a blended bag.

So, on two-wheeler facet, we now have seen a really strong quantity from likes of TVS Motor. Among the many passenger automobile facet Mahindra & Mahindra has reported good set of quantity whereas there was a disappointment from Maruti’s facet. So, type of blended bag throughout all these sectors.