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Demand across regions has improved over the past month, but is yet to pick
up pace Y-o-Y. Prices, however, have increased sharply, in the ~INR 10-
75/bag range (in bouts of ~INR 10-15/bag over the month), to all-time high
levels in Jaipur, Ahmedabad, Hyderabad and Cochin. Our interactions with
dealers suggest that the increase in prices is not fully supported by demand.
With supplies in the non-trade segment reducing substantially, average
realisation increase for the March quarter could surprise positively.
January despatches up 6.4% Y-o-Y for major players
Aggregate despatches of seven major players (comprising ~55% of overall
industry despatches) jumped 6.4% Y-o-Y for January 2011. We estimate
industry despatches for the month to grow in lower single digits since January
2010 was a high base month with 13% growth in despatches.
Region-wise summary
We 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:
North: Non-trade supply reduced
With supplies in the non-trade segment reducing significantly, trade sales have
increased in tier I and II cities. Despatches from Rajasthan (which were affected
by Gujjar agitations) have resumed normalcy from mid January. Even though
demand has improved compared to January 2011, price hikes of ~INR 20-
75/bag are higher than expected. Prices in Jaipur at ~INR 260/bag are at an all
time high. Government of Punjab has banned sand mining, which may impact
demand and reverse price hike in the state. Prices in other states are expected
to increase further by ~INR 10-15/bag in the coming weeks.
East: Wagon shortage supports higher prices
Demand has picked up and as per our dealer interactions, inventory levels have
reduced. Prices have increased substantially in the INR 25-50/bag range. With
shortage of wagons hindering material movement and improved demand,
further price hikes are expected in the region.
South: Marginal improvement in demand
Dealers convey marginal improvement in demand compared to January 2011.
Prices have increased by ~INR 10-20/bag in the region, except Chennai. Prices
in Hyderabad at ~INR 250/bag and Cochin at ~INR 310/bag are at an all time
high. Further price hike is expected in Hyderabad in the coming week.
West: Wagon shortage and restriction on truck overloading affect
supplies
Restriction on overloading of trucks by the Gujarat government has restricted
material movement in the state. Wagon shortage has restricted supplies to
Maharashtra, leading to price improvement. Prices in Ahmedabad at ~INR
250/bag are at an all time high. Prices have improved by ~INR 5-30/bag in
January. Hike of INR 10/bag expected in coming weeks.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Demand across regions has improved over the past month, but is yet to pick
up pace Y-o-Y. Prices, however, have increased sharply, in the ~INR 10-
75/bag range (in bouts of ~INR 10-15/bag over the month), to all-time high
levels in Jaipur, Ahmedabad, Hyderabad and Cochin. Our interactions with
dealers suggest that the increase in prices is not fully supported by demand.
With supplies in the non-trade segment reducing substantially, average
realisation increase for the March quarter could surprise positively.
January despatches up 6.4% Y-o-Y for major players
Aggregate despatches of seven major players (comprising ~55% of overall
industry despatches) jumped 6.4% Y-o-Y for January 2011. We estimate
industry despatches for the month to grow in lower single digits since January
2010 was a high base month with 13% growth in despatches.
Region-wise summary
We 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:
North: Non-trade supply reduced
With supplies in the non-trade segment reducing significantly, trade sales have
increased in tier I and II cities. Despatches from Rajasthan (which were affected
by Gujjar agitations) have resumed normalcy from mid January. Even though
demand has improved compared to January 2011, price hikes of ~INR 20-
75/bag are higher than expected. Prices in Jaipur at ~INR 260/bag are at an all
time high. Government of Punjab has banned sand mining, which may impact
demand and reverse price hike in the state. Prices in other states are expected
to increase further by ~INR 10-15/bag in the coming weeks.
East: Wagon shortage supports higher prices
Demand has picked up and as per our dealer interactions, inventory levels have
reduced. Prices have increased substantially in the INR 25-50/bag range. With
shortage of wagons hindering material movement and improved demand,
further price hikes are expected in the region.
South: Marginal improvement in demand
Dealers convey marginal improvement in demand compared to January 2011.
Prices have increased by ~INR 10-20/bag in the region, except Chennai. Prices
in Hyderabad at ~INR 250/bag and Cochin at ~INR 310/bag are at an all time
high. Further price hike is expected in Hyderabad in the coming week.
West: Wagon shortage and restriction on truck overloading affect
supplies
Restriction on overloading of trucks by the Gujarat government has restricted
material movement in the state. Wagon shortage has restricted supplies to
Maharashtra, leading to price improvement. Prices in Ahmedabad at ~INR
250/bag are at an all time high. Prices have improved by ~INR 5-30/bag in
January. Hike of INR 10/bag expected in coming weeks.
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