| Date: |
31-03-2016 |
| Subject: |
Shares of tile makers surge after anti-dumping duty on Chinese imports |
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MUMBAI: Shares of tile makers were in the limelight on Tuesday as the government's move to impose anti-dumping duty on vitrified tiles from China bolstered sentiment.
Analysts said the move could help extend gains for these stocks, which have underperformed their benchmarks so far this year. HSIL and Somany Ceramics are this year. HSIL and Somany Ceramics are among their top picks.
Nitco rallied the most, gaining almost 11% while others such as Aro Granite, Somany Ceramics, HSIL, Asian Granito and Euro Ceramics rallied 1-6%.
The anti-dumping duty of $1.37 per square metre is lower than industry expectations of $3. The move will benefit the tile makers nevertheless, particularly the smaller players.
"The duty should reduce the Chinese imports by around 50% and bring an overall better pricing discipline in the industry...overall imports in India should come down to 4-5% from around 10% currently," Samir Tulshan, building material analyst at JM Financial Institutional Securities said.
Investors have shied away from most tile makers of late with stocks falling 5-54% due to slowdown in the real estate industry. The BSE's midcap has fallen 6% so far this year, while the small-cap index has dropped 12%. Analysts said the antidumping duty along with the decline in gas prices would revive the sentiment in the sector.
"The anti-dumping duty will make Indian players more competitive and better placed in terms of market share. Gas prices have come down significantly in the last six to seven months, which is positive for tile companies as a substantial part of their cost of production is fuel," Daljeet Kohli, head of research at India Nivesh Securities said.
JM's Tulshan said: "We draw comfort from government's focus on housing and sanitation schemes like Housing for All, Swachh Bharat and building of smart cities."
Analysts are positive on HSIL and Somany Ceramics because of cheaper valuations. Despite expensive valuations of 24 times estimated 2017-18 earnings, analysts are positive on Kajaria Ceramics given its position as an industry leader.
"Valuations-wise HSIL is attractive, but one can also buy Kajaria on a 5-10% dip," Gaurang Shah, vice-president at Geojit BNP Paribas said. Kajaria Ceramics, which has gained 170% in the last two years, ended flat at `944 on Tuesday.
Source : economictimes.indiatimes.com
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