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Top four manufacturers report better
despatches growth
Top four manufacturers (Ultra Tech, ACC, Ambuja and JP
Associates) cumulatively reported 8.2% YoY growth in
despatches for the month of March ’11 led by 12.4% YoY
growth of ACC and 22% YoY growth of JP Associates. Our
interaction with dealers suggests that there are some early
signals of price correction in Central, North and Southern
India whereas price remains firm in Eastern India. We
maintain Sell on large cap cement stocks (ACC, Ambuja
and Ultra Tech) and prefer mid-caps like Orient Paper,
India Cements and JK Cement under our coverage. We
downgrade Grasim and Shree Cement to Hold from Buy
after recent appreciation in stock prices. Shree cement has
appreciated by 23.8% since our last recommendation post
Q3FY11 results whereas Grasim has appreciated by 6.8%
and upside seems to be limited for now.
�� Despatches of top four manufacturers relatively
better: Top four manufactures, who control 43% market
share of Indian cement industry have reported a
cumulative 8.2% YoY despatches growth for the month of
March ’11 led by 22% YoY growth of JP Associates and
12.4% YoY despatches growth of ACC. Ambuja Cements
despatches grew by 6.6% YoY, whereas, Ultra Tech
reported a growth of 2.2% YoY.
�� March ’11 despatches could be in the range of 19-19.5
MT: We believe that industry despatches for the month of
March ’11 could be in the range of 19-19.5 MT partly
because of demand from non-trade segment and also, in
our view, inventory push at the dealers’ end in the last
month of fiscal year can help to post better numbers.
�� Retail prices show some early signals of softening:
Dealer interactions reveal that prices corrected by Rs 5-
7/bag in Central region recently and there could be a price
cut of Rs 5-10/bag in North and South regions. In Western
region, a price hike of Rs 5/bag was deferred due to nonabsorption
of recent price hikes. In Eastern region, we
could see a price hike of Rs 5/bag going ahead. Current
pan-India average price is ruling at Rs 265-270/bag, an
increase of ~12% in last 3 months.
�� Maintain Sell on large caps; prefer mid-caps due to
attractive valuations: We maintain Sell rating on large
cement companies (ACC, Ambuja and Ultra Tech). We
downgrade Grasim and Shree Cement to Hold from Buy
after recent appreciation in stock prices. Shree cement has
appreciated by 23.8% since our last recommendation post
Q3FY11 results whereas Grasim has appreciated by 6.8%
and upside seems to be limited for now. We have a Buy
rating on mid-caps (Orient Paper, India Cement & JK
Cement) under our coverage.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Top four manufacturers report better
despatches growth
Top four manufacturers (Ultra Tech, ACC, Ambuja and JP
Associates) cumulatively reported 8.2% YoY growth in
despatches for the month of March ’11 led by 12.4% YoY
growth of ACC and 22% YoY growth of JP Associates. Our
interaction with dealers suggests that there are some early
signals of price correction in Central, North and Southern
India whereas price remains firm in Eastern India. We
maintain Sell on large cap cement stocks (ACC, Ambuja
and Ultra Tech) and prefer mid-caps like Orient Paper,
India Cements and JK Cement under our coverage. We
downgrade Grasim and Shree Cement to Hold from Buy
after recent appreciation in stock prices. Shree cement has
appreciated by 23.8% since our last recommendation post
Q3FY11 results whereas Grasim has appreciated by 6.8%
and upside seems to be limited for now.
�� Despatches of top four manufacturers relatively
better: Top four manufactures, who control 43% market
share of Indian cement industry have reported a
cumulative 8.2% YoY despatches growth for the month of
March ’11 led by 22% YoY growth of JP Associates and
12.4% YoY despatches growth of ACC. Ambuja Cements
despatches grew by 6.6% YoY, whereas, Ultra Tech
reported a growth of 2.2% YoY.
�� March ’11 despatches could be in the range of 19-19.5
MT: We believe that industry despatches for the month of
March ’11 could be in the range of 19-19.5 MT partly
because of demand from non-trade segment and also, in
our view, inventory push at the dealers’ end in the last
month of fiscal year can help to post better numbers.
�� Retail prices show some early signals of softening:
Dealer interactions reveal that prices corrected by Rs 5-
7/bag in Central region recently and there could be a price
cut of Rs 5-10/bag in North and South regions. In Western
region, a price hike of Rs 5/bag was deferred due to nonabsorption
of recent price hikes. In Eastern region, we
could see a price hike of Rs 5/bag going ahead. Current
pan-India average price is ruling at Rs 265-270/bag, an
increase of ~12% in last 3 months.
�� Maintain Sell on large caps; prefer mid-caps due to
attractive valuations: We maintain Sell rating on large
cement companies (ACC, Ambuja and Ultra Tech). We
downgrade Grasim and Shree Cement to Hold from Buy
after recent appreciation in stock prices. Shree cement has
appreciated by 23.8% since our last recommendation post
Q3FY11 results whereas Grasim has appreciated by 6.8%
and upside seems to be limited for now. We have a Buy
rating on mid-caps (Orient Paper, India Cement & JK
Cement) under our coverage.
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