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May 2011 cement dispatches remain muted…
Cement majors report ~2-5% MoM decline in dispatches for month
In May 2011, the major cement players reported dismal sales dispatch
numbers except ACC, which posted ~14% YoY growth in dispatches.
Ambuja Cement, UltraTech Cement & Shree cement reported ~7%, ~3%
& ~7% YoY decline in dispatches respectively in May 2011. JP Associates
& JK Lakshmi reported growth of ~3% YoY each in dispatches. Hence, on
an aggregate basis, the volumes of the major six players have been
subdued in May 2011 with dispatch growth remaining flat on YoY basis.
Moreover, on a MoM basis, the aggregate dispatches of the six players
declined by ~2%. Overall, we expect the industry dispatch growth at
~4% YoY and ~2% MoM in May 2011 on account of a slowdown in
construction activities in both infrastructure and housing segments. Also,
the volumes were impacted on the back of labour unavailability due to the
harvesting season in most parts of the country.
During the month, ACC reported dispatch growth of ~14% YoY (~3%
decline MoM) to 1.99 MT while JP Associates reported ~3% YoY (~5%
decline MoM) to 1.37 MT. Ambuja reported a decline of ~7% YoY and
~5% MoM to 1.76 MT while UltraTech declined ~3% YoY to 3.24 MT.
Cement prices declines further by | 5-10 per bag in May 2011
Cement prices have declined by | 5-10 per bag in May 2011 across all
regions as cement demand remained sluggish during April-May, which
led to a correction in prices and were down by | 15-20 per bag from the
all time highs in March 2011. However, prices sustained in the southern
region despite lacklustre demand as the prices are holding up due to price
discipline being maintained by players in the region. We expect the
cement prices will remain under pressure till Sept-Oct 2011 on account of
arrival of monsoon and uncertainty on the demand revival.
Industry outlook
All-India cement consumption grew ~4% YoY in FY11 to ~208 million
tonnes (MT) as against ~200 MT in FY10. The utilisation rate declined to
~77% in FY11 from ~87% in FY10 due to addition of ~44 MT of effective
capacity in FY11 as against incremental demand of ~9 MT during the
period. For FY12E, we estimate consumption growth of 6.5% YoY and
utilisation rate at 77% (flat YoY) as the incremental demand of ~14 MT
will be negated by ~15 MT effective capacity additions during the year.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
May 2011 cement dispatches remain muted…
Cement majors report ~2-5% MoM decline in dispatches for month
In May 2011, the major cement players reported dismal sales dispatch
numbers except ACC, which posted ~14% YoY growth in dispatches.
Ambuja Cement, UltraTech Cement & Shree cement reported ~7%, ~3%
& ~7% YoY decline in dispatches respectively in May 2011. JP Associates
& JK Lakshmi reported growth of ~3% YoY each in dispatches. Hence, on
an aggregate basis, the volumes of the major six players have been
subdued in May 2011 with dispatch growth remaining flat on YoY basis.
Moreover, on a MoM basis, the aggregate dispatches of the six players
declined by ~2%. Overall, we expect the industry dispatch growth at
~4% YoY and ~2% MoM in May 2011 on account of a slowdown in
construction activities in both infrastructure and housing segments. Also,
the volumes were impacted on the back of labour unavailability due to the
harvesting season in most parts of the country.
During the month, ACC reported dispatch growth of ~14% YoY (~3%
decline MoM) to 1.99 MT while JP Associates reported ~3% YoY (~5%
decline MoM) to 1.37 MT. Ambuja reported a decline of ~7% YoY and
~5% MoM to 1.76 MT while UltraTech declined ~3% YoY to 3.24 MT.
Cement prices declines further by | 5-10 per bag in May 2011
Cement prices have declined by | 5-10 per bag in May 2011 across all
regions as cement demand remained sluggish during April-May, which
led to a correction in prices and were down by | 15-20 per bag from the
all time highs in March 2011. However, prices sustained in the southern
region despite lacklustre demand as the prices are holding up due to price
discipline being maintained by players in the region. We expect the
cement prices will remain under pressure till Sept-Oct 2011 on account of
arrival of monsoon and uncertainty on the demand revival.
Industry outlook
All-India cement consumption grew ~4% YoY in FY11 to ~208 million
tonnes (MT) as against ~200 MT in FY10. The utilisation rate declined to
~77% in FY11 from ~87% in FY10 due to addition of ~44 MT of effective
capacity in FY11 as against incremental demand of ~9 MT during the
period. For FY12E, we estimate consumption growth of 6.5% YoY and
utilisation rate at 77% (flat YoY) as the incremental demand of ~14 MT
will be negated by ~15 MT effective capacity additions during the year.
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