India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
With the onset of the busy season, all regions are keen to hike prices. So far, demand has picked up in East and West, resulting in lower inventory levels and price hikes of ~INR 10/bag in the first week of January 2011. In other regions, companies are looking to hike prices with the slightest improvement in demand.
n December 2010 despatches up 6.5% for major players
Aggregate despatches of seven players (comprising ~52% of the overall industry despatches) are up 6.5% Y-o-Y in December 2010. We estimate industry despatches for December 2010 to be flat or rise marginally, Y-o-Y. Though M-o-M, the December 2010 industry despatches are likely to grow by an impressive 18% (which compares closely with the October 2010 despatches of 18.2 mn tonnes, when the industry managed a price hike of INR 10-20 /bag across regions), we believe it to be not backed by demand, since there were price cuts across regions, except South.
Region-wise summary
We have surveyed 29 cities across India to get a region-wise trend of demand and prices in both trade and non-trade categories. Key highlights are as below:
n North: Winter freezes demand
Demand that had picked up in mid December 2010, lost momentum due to strong winter in second half of the month. It is expected to pick up again after the harvesting season (festival of Lohri) in mid January 2011. Currently, prices across the region are low against last month, but are expected to be hiked with pick up in demand. We expect an INR 10/bag hike in the second week of January 2011.
n East: Inventory at low levels
Demand has picked up, and as per dealer interactions, inventory levels have reduced. Though prices remain low compared with last month, they have recovered from the lows seen in December 2010. With expected shortage of wagons hindering the material movement and improved demand, further price hikes are expected in the region.
n South: Prices remain flat
Even as dealers convey muted demand growth, prices have remained nearly flat in the region, except Karnataka. Uncertainty over the Telangana issue prevails even after the Shri Krishna Committee report and remains an overhang on the demand scenario in Andhra Pradesh.
n West: Wagon shortage & restriction on truck overloading affect supplies
Wagon shortage has restricted supplies into Maharashtra, leading to improvement in prices. Owing to the upcoming Vibrant Gujarat Summit, the state government has restricted overloading of trucks, limiting supplies into the region. Prices in Gujarat are likely to increase in the coming weeks.
No comments:
Post a Comment