January 10, 2013 / 11:24 AM / in 5 years

Cement companies warrant caution: J.P.Morgan

Reuters Market Eye - J.P Morgan cautions the near-term outlook for Indian cement companies remains “hazy”, in contrast with market consensus for a strong V-shaped recovery in infrastructure spending over the next 12 months.

The investment bank says a growth in industry demand of more than 8 percent is unlikely over the next two years, as capacity will continue to outpace demand.

J.P.Morgan says Indian steel is a better play than cement.

“Indian steel companies are adding little capacity and demand increase would allow them to raise prices back to import levels,” the bank wrote in a note dated Wednesday.

Reporting by Manoj Dharra

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