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Cement
ƒ Volumes grow ~6% YoY (~8% QoQ) in Q3FY11
In Q3FY11, the all-India cement sales volume has been muted and is
expected to grow 5.6% YoY against 9.4% in Q3FY10 and 3.3% in
Q2FY11. Low dispatches during November-December 2010
(declined ~18% YoY in November) offset the 18% YoY growth
recorded in October 2010. In YTDFY11, dispatches grew 5.2% YoY
against 10% in FY10. Volumes were impacted in Q3FY11 on account
of labour shortage due to the festive season, political turmoil in
Andhra Pradesh, slowdown in infrastructure activities followed by
prolonged monsoon season in several parts of the country. Capacity
utilisation for Q3FY11 and YTDFY11 is expected at 75% against 87%
in FY10. The decline in utilisation rate was on account of ~40 MTPA
of new capacities that have been stabilised during YTDFY11. We
expect utilisation rate for FY12E at 82% against 78% for FY11E on
account of higher incremental demand compared to incremental
effective capacity.
ƒ Cement prices increase led by southern and western region
All-India average cement prices increased ~4% YoY in Q3FY11 led
by price increase in the southern and western region. Average
cement prices in southern region rose by ~30% YoY (~25% QoQ)
to | 238 per bag in Q3FY11 after the prices were artificially hiked by
the cement producers in southern region during Sept-Oct 2010 by
taking production cuts. In western region, the prices increased by
~6% YoY to | 257 per bag during the quarter. However, the cement
prices have been subdued in Northern and Central region where the
prices fell by 3-6% YoY in Q3FY11. The average price stood at | 220
per bag in both the regions during the quarter. In Eastern region, the
prices declined by ~2% YoY (~1% QoQ) to | 251 per bag.
ƒ Operating margin of cement universe to decline by ~800 bps YoY
Net sales of our cement coverage universe (excluding UltraTech, as
its Q3FY11 result will not be comparable on YoY basis on account of
merger with Samruddhi Cement) is expected to decline marginally
by ~1% YoY on account of subdued sales volume and prices
decline in northern and central regions. However, on QoQ basis, the
net sales are expected to increase by ~13%. The EBITDA margin of
the universe is expected to decline by ~800 bps YoY to 16%, while
it is expected to improve ~485 bps QoQ. The total net profit of our
universe is expected to decline by 44% YoY, however on sequential
basis, it is expected to increase by 140%.
ACC We expect the sales volume to increase ~4% YoY (~15% QoQ) to 5.6 MT in
Q4CY10. We estimate net realisation will improve ~5% QoQ to | 3,542 per tonne.
EBITDA is expected to decline ~32% YoY to | 572 per tonne. However, QoQ, it is
expected to increase by ~63% on account of increase in realisation
Ambuja
Cement
Sales volumes are expected to increase ~5% YoY (~15% QoQ) to 5 MT in Q4CY10
due to capacity expansion by the company. We estimate realisation will improve
~2% YoY (~5% QoQ) to | 3757 per tonne. EBITDA is expected to decline ~10% YoY
to | 822 per tonne. However, it is expected to clock growth of ~26% growth QoQ
UltraTech
Cement
The blended sales volume is expected to remain flat YoY in Q3FY11 to 9.8 MT
(including Samruddhi volume in Q3FY10). It is expected to grow ~7% QoQ. The
blended realisation is expected to improve by 13% YoY (5% QoQ) at | 3687 per
tonne. Blended EBITDA is expected to decline by ~20% YoY to | 612 per tonne
Shree Cement We expect cement volumes to improve by 1.5% YoY (~12% QoQ) to 2.6 MT in
Q3FY11. Cement realisations are expected to decline marginally by 1% QoQ to |
2929 per tonne. We estimate merchant power sales volume of ~76 million units at
realisation of | 4 per unit. Cement EBITDA is expected to decline ~56% YoY (~9%
QoQ) to | 526 per tonne
India Cement Sales volumes are expected to decline ~19% YoY (~17% QoQ) to 2.25 MT in
Q3FY11 on account of demand slowdown in its major markets in South India.
However, realisation is expected to improve by 14% YoY (15% QoQ) to | 3576 per
tonne. We estimate EBITDA will improve ~30% YoY (~418% QoQ) to | 546 per
tonne
JK Cement Blended sales volumes (grey and white) are expected to increase ~17% YoY (~6%
QoQ) to 1.27 MT. We estimate blended realisation will decline ~9% YoY to | 3614
per tonne. However, it is expected to improve ~3% on a sequential basis. EBITDA is
expected to decline by ~80% YoY but improve by ~300% QoQ to | 174 per tonne
JK Lakshmi
Cement
Sales volumes are expected to decline 7% YoY to 1.1 MT due to poor demand.
However, the volume is expected to grow ~13% QoQ as demand picked up after
monsoons. Realisation is expected to improve ~1% QoQ to | 2844 per tonne. We
estimate EBITDA will decline ~62% YoY (flat QoQ) to | 292 per tonne
Orient Paper Cement sales volumes are likely to decline ~14% YoY (~5% QoQ) to 0.8 MT.
However, cement realisation is likely to improve ~12% YoY (~16% QoQ) to | 2677
per tonne. Cement EBIT is expected to surge ~500% to | 402 per tonne while the
paper business is expected to report EBIT loss of | 1.2 crore
Mangalam
Cement
Sales volume is expected to decline ~16% YoY (~4% QoQ) to 0.37 MT on account
of a slowdown in demand in its major markets. We estimate realisation will decline
marginally by ~1% QoQ (~12% YoY) to | 2964 per tonne. EBITDA is expected to
decline ~95% YoY (~31% QoQ) to | 54 per tonne
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