Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Grasim Industries : F3Q11: Takeaways from Conference Call
Quick Comment: We remain constructive on the sector
and the stock. We continue to believe that demand
recovery will support cement prices. Moreover, the
industry has exhibited good discipline in the last few
months, notwithstanding muted demand, which will
bode well as we see full recovery in demand. In our view,
capacity concerns are overdone and we believe that
effective rise in capacity will be relatively modest in F12e.
Lower-than-expected demand and
higher-than-expected rise in costs (primarily coal)
are the key concerns.
Cement: As per the management, there has been some
demand recovery in the current month relative to Dec-10.
It expects demand to recover in QE Mar-11 from muted
levels YTD given that it is the busiest quarter from a
construction perspective. However, government
spending remains muted and this will affect overall
growth. Management expects demand growth of 8-10%
to come back in F2012e.
There have been some price gains in the current
month in North and East (after some weakness in QE
Dec-10 in these regions), while prices in South and West
remain stable. Management expects further gains in
prices in the current quarter with recovery in demand.
The price of international coal, which comprises around
35% of the company’s total coal requirement, increased
to around $115/T in QE Dec-10 for the company. This is
likely to increase to $130/T in the current quarter and full
impact of recent spurt in international coal price will
come through in QE Jun-11 given that the company has
some inventory. Moreover, management commented
that coal prices have come off marginally in the last few
days and the situation remains fluid. In addition, railway
freight rates too have gone up in Dec-10, which will also
see full impact in QE Mar-11.
As per the management, margins are likely to improve
on a sequential basis in QE Mar-11. While demand –
supply balance is likely to be restored in F2013e, which would
give pricing power to the industry, it expects margins to
improve on a sequential basis hereon, subject to demand
recovering to 8-10% in F2012e.
VSF: The business remains in a sweet spot from both demand
and pricing perspective. The plants are operating at full
utilization and volume progression should remain strong. The
company has taken a price hike of around 6-7% in the current
quarter, which coupled with reduction in discount / commission
should further boost realization. While material costs (pulp in
particular) too have increased, the company is partly backward
integrated and this would support overall margins at the
consolidated level.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Grasim Industries : F3Q11: Takeaways from Conference Call
Quick Comment: We remain constructive on the sector
and the stock. We continue to believe that demand
recovery will support cement prices. Moreover, the
industry has exhibited good discipline in the last few
months, notwithstanding muted demand, which will
bode well as we see full recovery in demand. In our view,
capacity concerns are overdone and we believe that
effective rise in capacity will be relatively modest in F12e.
Lower-than-expected demand and
higher-than-expected rise in costs (primarily coal)
are the key concerns.
Cement: As per the management, there has been some
demand recovery in the current month relative to Dec-10.
It expects demand to recover in QE Mar-11 from muted
levels YTD given that it is the busiest quarter from a
construction perspective. However, government
spending remains muted and this will affect overall
growth. Management expects demand growth of 8-10%
to come back in F2012e.
There have been some price gains in the current
month in North and East (after some weakness in QE
Dec-10 in these regions), while prices in South and West
remain stable. Management expects further gains in
prices in the current quarter with recovery in demand.
The price of international coal, which comprises around
35% of the company’s total coal requirement, increased
to around $115/T in QE Dec-10 for the company. This is
likely to increase to $130/T in the current quarter and full
impact of recent spurt in international coal price will
come through in QE Jun-11 given that the company has
some inventory. Moreover, management commented
that coal prices have come off marginally in the last few
days and the situation remains fluid. In addition, railway
freight rates too have gone up in Dec-10, which will also
see full impact in QE Mar-11.
As per the management, margins are likely to improve
on a sequential basis in QE Mar-11. While demand –
supply balance is likely to be restored in F2013e, which would
give pricing power to the industry, it expects margins to
improve on a sequential basis hereon, subject to demand
recovering to 8-10% in F2012e.
VSF: The business remains in a sweet spot from both demand
and pricing perspective. The plants are operating at full
utilization and volume progression should remain strong. The
company has taken a price hike of around 6-7% in the current
quarter, which coupled with reduction in discount / commission
should further boost realization. While material costs (pulp in
particular) too have increased, the company is partly backward
integrated and this would support overall margins at the
consolidated level.
No comments:
Post a Comment