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Cement
Volumes grow ~5% YoY (~14% QoQ) in Q4FY11
In Q4FY11, all-India cement sales volumes grew ~5% YoY (~14%
QoQ). However, volume growth for our cement coverage universe
was ~2% YoY (~14% QoQ). Volume growth remained muted YoY
on account of a slowdown in construction activities due to
environmental issues, both in the housing and infrastructure
segments. However, demand has picked up sequentially after the
end of the prolonged monsoon season in the southern region &
extreme winter season in northern region. Also, improvement in
sand availability in western region with stabilisation of key issues
like political uncertainty in Andhra Pradesh & Gujjar agitation in
Rajasthan helped in sequential improvement of dispatches growth.
Amongst our coverage companies, JK Cement, Orient paper, India
Cement and Heidelberg cement are expected to report highest
volume growth (25-29% QoQ).
Cement prices increased by ~9% QoQ during Q4FY11
All India Average cement prices witnessed 9% QoQ growth in
Q4FY11 to | 263 per bag led by Northern and Central regions where
prices shot up sharply by 13% QoQ to | 272 and | 252 per bag
respectively. In western region the prices increased by 8% QoQ to |
258 per bag while it moved up by~5% each in Southern and
Eastern regions to | 278 per bag and | 255 per bag respectively.
However on YoY basis, all India average cement prices is up by 11%
led by maintaining pricing discipline by southern and western
regions players who artificially hiked the prices by taking production
cut in September 2010. Cement prices are up by ~34% and ~16%
YoY in the southern and western regions, whereas the prices are
almost flat on YoY in the central and eastern regions.
Operating margin of cement universe to decline by ~700 bps YoY
Net sales of our cement coverage universe (excluding UltraTech, as
its Q4FY11 result will not be comparable on YoY basis on account of
merger with Samruddhi cement) is expected to increase by ~9%
YoY. However, on QoQ basis, the net sales are expected to increase
by ~27%. The EBITDA margin of the universe is expected to decline
by ~700 bps YoY to 20%, while it is expected to improve ~600 bps
QoQ. The total net profit of our universe is expected to decline by
25% YoY, however on sequential basis, it is expected to increase by
40%.
Company specific view
Company Remarks
ACC We expect the sales volume to increase ~12% YoY (~12% QoQ) to 6.2 MT in
Q1CY11. We estimate net realisation will improve ~9% QoQ to | 3,828/tonne.
EBITDA is expected to increase ~76% QoQ to | 658/tonne. However, it is expected
to decline ~41% YoY due to lower realisation and higher costs
Ambuja
Cement
Sales volume is expected to increase ~7% YoY (~12% QoQ) to 5.7 MT in Q1CY11.
We estimate realisation will improve ~2% YoY (~9% QoQ) to | 3869/tonne.
EBITDA is expected to grow ~43% QoQ to | 895/tonne. However, it is expected to
decline ~24% YoY
UltraTech
Cement
The blended sales volume is expected to remain flat YoY in Q4FY11 at 11 MT
(including Samruddhi volume in Q4FY10). However, it is expected to grow ~12%
QoQ. Blended realisation is expected to improve ~8% QoQ (~21% YoY) at |
4081/tonne. Blended EBITDA is expected to increase ~28% QoQ to | 612/tonne
Shree
Cement
We expect cement sales volumes to increase 6% YoY (~11% QoQ) to 2.9 MT in
Q4FY11. Cement realisations are expected to increase by 3% YoY (~18% QoQ) to |
3351/tonne. We estimate merchant power sales volume of ~128 million units at
realisation of | 4.5 per unit. Cement EBITDA is expected to increase ~70% QoQ
(decline ~11% YoY) to | 943/tonne
India Cement Sales volume is expected to increase ~26% QoQ to 2.6 MT in Q4FY11. However, it
is likely to decline ~13% YoY due to sluggish growth in its selling markets. Also,
due to pricing discipline maintained in the region, realisation is expected to improve
~24% YoY (~5% QoQ) to | 3862/tonne. We estimate EBITDA will improve ~58%
YoY (~9% QoQ) to | 677 /tonne
JK Cement Blended sales volume (grey & white) is expected to increase 17% YoY (~29% QoQ)
to 1.6 MT, respectively. The blended realisation is expected to increase by ~5%
YoY (~8% QoQ) to | 4048/tonne. EBITDA/tonne is expected to increase ~48% QoQ
to | 632 while YoY it is expected to decline ~15%
JK Lakshmi
Cement
The sales volume is expected to increase ~18% QoQ to 1.3 MT while it is expected
to decline ~10% YoY. The realisation is expected to improve ~12% QoQ (~4%
YoY) to | 3270/tonne. EBITDA is expected to improve significantly by 140% QoQ to
| 550/tonne while it is expected to decline ~24% YoY
Heidelberg
Cement
We expect the sales volume to increase ~25% QoQ (~3% YoY) to 0.82 MT in
Q1CY11. We estimate the net realisation will improve ~12% QoQ to | 3,229/tonne.
However, it is expected to decline ~4% YoY. EBITDA is expected at | 247/tonne for
the quarter as against loss in EBITDA of | 91/tonne in Q4CY10
Orient Paper Cement sales volumes are likely to increase ~28% QoQ (decline ~5% YoY) to 0.99
MT. However, due to pricing discipline, cement realisation is likely to improve
~21% YoY (~7% QoQ) to | 3165/tonne. Cement EBIT is expected to surge ~21%
QoQ (~1% YoY) to | 731/tonne. We expect fan and paper segments to report EBIT
of | 18.9 crore and | 2.8 crore, respectively, against | 10.3 crore and | 2.4 crore in
Q3FY11
Birla Corp Sales volume is expected to increase ~12% QoQ (decline 1% YoY) to 1.62 MT. The
realisation is expected to increase 12% QoQ (decline ~4% YoY) to | 3376/tonne.
Blended EBITDA is expected to increase sharply ~43% QoQ to | 896/tonne while
sequentially it is expected to decline by 16% YoY
Mangalam
Cement
Sales volume is expected to remain flat sequentially at 0.41 MT and decline ~16%
YoY. We expect realisations to improve ~10% QoQ (decline 3% YoY) to | 2978 per
tonne. The EBITDA is expected to increase significantly by 350% QoQ to |
238/tonne while it is expected to decline ~68% YoY
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cement
Volumes grow ~5% YoY (~14% QoQ) in Q4FY11
In Q4FY11, all-India cement sales volumes grew ~5% YoY (~14%
QoQ). However, volume growth for our cement coverage universe
was ~2% YoY (~14% QoQ). Volume growth remained muted YoY
on account of a slowdown in construction activities due to
environmental issues, both in the housing and infrastructure
segments. However, demand has picked up sequentially after the
end of the prolonged monsoon season in the southern region &
extreme winter season in northern region. Also, improvement in
sand availability in western region with stabilisation of key issues
like political uncertainty in Andhra Pradesh & Gujjar agitation in
Rajasthan helped in sequential improvement of dispatches growth.
Amongst our coverage companies, JK Cement, Orient paper, India
Cement and Heidelberg cement are expected to report highest
volume growth (25-29% QoQ).
Cement prices increased by ~9% QoQ during Q4FY11
All India Average cement prices witnessed 9% QoQ growth in
Q4FY11 to | 263 per bag led by Northern and Central regions where
prices shot up sharply by 13% QoQ to | 272 and | 252 per bag
respectively. In western region the prices increased by 8% QoQ to |
258 per bag while it moved up by~5% each in Southern and
Eastern regions to | 278 per bag and | 255 per bag respectively.
However on YoY basis, all India average cement prices is up by 11%
led by maintaining pricing discipline by southern and western
regions players who artificially hiked the prices by taking production
cut in September 2010. Cement prices are up by ~34% and ~16%
YoY in the southern and western regions, whereas the prices are
almost flat on YoY in the central and eastern regions.
Operating margin of cement universe to decline by ~700 bps YoY
Net sales of our cement coverage universe (excluding UltraTech, as
its Q4FY11 result will not be comparable on YoY basis on account of
merger with Samruddhi cement) is expected to increase by ~9%
YoY. However, on QoQ basis, the net sales are expected to increase
by ~27%. The EBITDA margin of the universe is expected to decline
by ~700 bps YoY to 20%, while it is expected to improve ~600 bps
QoQ. The total net profit of our universe is expected to decline by
25% YoY, however on sequential basis, it is expected to increase by
40%.
Company specific view
Company Remarks
ACC We expect the sales volume to increase ~12% YoY (~12% QoQ) to 6.2 MT in
Q1CY11. We estimate net realisation will improve ~9% QoQ to | 3,828/tonne.
EBITDA is expected to increase ~76% QoQ to | 658/tonne. However, it is expected
to decline ~41% YoY due to lower realisation and higher costs
Ambuja
Cement
Sales volume is expected to increase ~7% YoY (~12% QoQ) to 5.7 MT in Q1CY11.
We estimate realisation will improve ~2% YoY (~9% QoQ) to | 3869/tonne.
EBITDA is expected to grow ~43% QoQ to | 895/tonne. However, it is expected to
decline ~24% YoY
UltraTech
Cement
The blended sales volume is expected to remain flat YoY in Q4FY11 at 11 MT
(including Samruddhi volume in Q4FY10). However, it is expected to grow ~12%
QoQ. Blended realisation is expected to improve ~8% QoQ (~21% YoY) at |
4081/tonne. Blended EBITDA is expected to increase ~28% QoQ to | 612/tonne
Shree
Cement
We expect cement sales volumes to increase 6% YoY (~11% QoQ) to 2.9 MT in
Q4FY11. Cement realisations are expected to increase by 3% YoY (~18% QoQ) to |
3351/tonne. We estimate merchant power sales volume of ~128 million units at
realisation of | 4.5 per unit. Cement EBITDA is expected to increase ~70% QoQ
(decline ~11% YoY) to | 943/tonne
India Cement Sales volume is expected to increase ~26% QoQ to 2.6 MT in Q4FY11. However, it
is likely to decline ~13% YoY due to sluggish growth in its selling markets. Also,
due to pricing discipline maintained in the region, realisation is expected to improve
~24% YoY (~5% QoQ) to | 3862/tonne. We estimate EBITDA will improve ~58%
YoY (~9% QoQ) to | 677 /tonne
JK Cement Blended sales volume (grey & white) is expected to increase 17% YoY (~29% QoQ)
to 1.6 MT, respectively. The blended realisation is expected to increase by ~5%
YoY (~8% QoQ) to | 4048/tonne. EBITDA/tonne is expected to increase ~48% QoQ
to | 632 while YoY it is expected to decline ~15%
JK Lakshmi
Cement
The sales volume is expected to increase ~18% QoQ to 1.3 MT while it is expected
to decline ~10% YoY. The realisation is expected to improve ~12% QoQ (~4%
YoY) to | 3270/tonne. EBITDA is expected to improve significantly by 140% QoQ to
| 550/tonne while it is expected to decline ~24% YoY
Heidelberg
Cement
We expect the sales volume to increase ~25% QoQ (~3% YoY) to 0.82 MT in
Q1CY11. We estimate the net realisation will improve ~12% QoQ to | 3,229/tonne.
However, it is expected to decline ~4% YoY. EBITDA is expected at | 247/tonne for
the quarter as against loss in EBITDA of | 91/tonne in Q4CY10
Orient Paper Cement sales volumes are likely to increase ~28% QoQ (decline ~5% YoY) to 0.99
MT. However, due to pricing discipline, cement realisation is likely to improve
~21% YoY (~7% QoQ) to | 3165/tonne. Cement EBIT is expected to surge ~21%
QoQ (~1% YoY) to | 731/tonne. We expect fan and paper segments to report EBIT
of | 18.9 crore and | 2.8 crore, respectively, against | 10.3 crore and | 2.4 crore in
Q3FY11
Birla Corp Sales volume is expected to increase ~12% QoQ (decline 1% YoY) to 1.62 MT. The
realisation is expected to increase 12% QoQ (decline ~4% YoY) to | 3376/tonne.
Blended EBITDA is expected to increase sharply ~43% QoQ to | 896/tonne while
sequentially it is expected to decline by 16% YoY
Mangalam
Cement
Sales volume is expected to remain flat sequentially at 0.41 MT and decline ~16%
YoY. We expect realisations to improve ~10% QoQ (decline 3% YoY) to | 2978 per
tonne. The EBITDA is expected to increase significantly by 350% QoQ to |
238/tonne while it is expected to decline ~68% YoY
Source: Company, ICICIdirect.com Research
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