Emkay: Cement Sector Update; Offtake improves in January

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Cement Sector Update; Offtake improves in January – Prices hiked across regions

n    Pick up in construction activities post festive season drives improved cement offtake in January - supply constraints fuel price hike of Rs10-15/bag across regions

n    Int’l coal prices up 53% (USD128/ton) over last 3 months, led by Australian floods. Full impact to be visible in Q4FY11-industry needs to sustain price hikes to protect margins

n    Sustainability of cement prices remains uncertain as the cement demand growth FY11YTD ~5% has now emerged as bigger concern than the overcapacity in the system

n    Maintain our NEUTRAL stance on the sector. Maintain negative stance on, Ultratech, Ambuja Cement, India cements and Madras Cement, remain positive on ACC & Grasim