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India Cement Sector
3QFY11 preview
3QFY11 revenue of cement companies is expected to grow 3%
yoy, mainly owing to 3% improvement in realization. We expect
EBITDA margin to decline ~710bps yoy on an average and net
profit to dip 32% yoy.
Realization to aid revenue growth. Cement companies’ revenue
is likely to increase 3% yoy and 17% qoq. Aggregate volume is
estimated to rise 1% yoy, while average realization is likely to rise
3% yoy and 7% qoq. Lower demand from real estate and
government projects led to lower volume growth, and price
discipline by manufacturers resulted in recovery in prices qoq.
EBITDA margin to decline yoy. We expect EBITDA margin to
decline ~710bps yoy, mainly due to lower volume growth and cost
increases. Average realization is expected to increase 3% yoy and
8% qoq. Average utilization rate during 3QFY11 stood at 76%
(~83% yoy and 73% qoq). All-India average cement prices were
up 3% yoy and 5% qoq.
Profit to be 32% lower yoy. Aggregate net profit is estimated to
decline 32% yoy (up 63% qoq), owing to 25% yoy dip in EBITDA
and higher depreciation expenses.
Factors to watch. Updates on commissioning of fresh capacities
and outlook on price would be key events to watch.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
India Cement Sector
3QFY11 preview
3QFY11 revenue of cement companies is expected to grow 3%
yoy, mainly owing to 3% improvement in realization. We expect
EBITDA margin to decline ~710bps yoy on an average and net
profit to dip 32% yoy.
Realization to aid revenue growth. Cement companies’ revenue
is likely to increase 3% yoy and 17% qoq. Aggregate volume is
estimated to rise 1% yoy, while average realization is likely to rise
3% yoy and 7% qoq. Lower demand from real estate and
government projects led to lower volume growth, and price
discipline by manufacturers resulted in recovery in prices qoq.
EBITDA margin to decline yoy. We expect EBITDA margin to
decline ~710bps yoy, mainly due to lower volume growth and cost
increases. Average realization is expected to increase 3% yoy and
8% qoq. Average utilization rate during 3QFY11 stood at 76%
(~83% yoy and 73% qoq). All-India average cement prices were
up 3% yoy and 5% qoq.
Profit to be 32% lower yoy. Aggregate net profit is estimated to
decline 32% yoy (up 63% qoq), owing to 25% yoy dip in EBITDA
and higher depreciation expenses.
Factors to watch. Updates on commissioning of fresh capacities
and outlook on price would be key events to watch.
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