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Cement
ƒ Cement volumes grew by ~9% YoY in Q2FY12
All-India cement dispatches grew ~11% YoY and ~7% YoY in July 2011
and August 2011, respectively. They are expected to end at ~9% YoY in
Q2FY12. The volumes were higher YoY due to lower base last year due
to sluggish demand during Q2FY11. On a sequential basis, cement
volumes remained muted and declined ~4% QoQ due to the slowdown
in construction activities due to onset of the monsoon season. Volume
growth for our cement coverage universe is expected to increase ~5%
YoY (decline ~5% QoQ) during the quarter.
ƒ Cement prices declined by ~| 20/bag QoQ during Q2FY12
Cement prices witnessed pressure in Q2FY12 as demand slackened
during the quarter due to the onset of monsoons. After cement prices
touched all-time highs during March-April 2011, prices started
correcting from May 2011 till August 2011. However, prices have
increased in September 2011 as construction activities picked up on
account of the end of monsoons. All-India average cement prices
declined by ~| 20/bag QoQ to | 253/bag in Q2FY12. The correction was
primarily due to pricing weakness in the northern & central markets.
Average retail prices in the northern & central region declined by ~| 20-
25/bag QoQ to | 253/bag and | 237/bag, respectively. Prices in the
western and eastern region declined by ~| 20/bag and stood at |
252/bag and | 245/bag, respectively. In the southern region, prices
remained almost firm led by maintenance of pricing discipline and
average price stood at | 279/bag.
ƒ Operating margin of cement universe to decline by ~760 bps QoQ
Aggregate revenues of our cement coverage universe are expected to
increase ~24% YoY on account of ~5% YoY increase in cement
volumes and ~15% YoY increase in cement realisations. However, on a
sequential basis, it is expected to decline ~10% on a decline in volumes
and realisations. The EBITDA margin of our coverage universe is
expected to increase by ~510 bps YoY to ~17% in Q2FY12E due to
higher realisation. However, it is expected to decline by ~760 bps on a
QoQ basis. Our coverage universe bottomline is expected to increase
significantly by ~134% YoY but decline by ~50% on a sequential basis
Company specific view
Company Remarks
ACC Cement sales volume is expected to increase ~16% YoY (decline ~5% QoQ) to 5.61
MT in Q3CY11. We estimate net realisation will decline ~7% QoQ to | 3752/tonne
(down | 300/tonne QoQ). EBITDA is expected to decline ~43% QoQ to | 527/tonne.
However, YoY, EBITDA/tonne is expected to increase ~50%
Ambuja Cement Cement sales volume is expected to increase ~9% YoY (decline ~10% QoQ) to 4.76
MT in Q3CY11. We expect cement realisation to decline ~7% QoQ to | 3808/tonne
(down | 300/tonne QoQ). EBITDA is expected to decline ~36% QoQ (increase ~8%
YoY) to | 703/tonne
UltraTech
Cement
The blended sales volume is expected to remain flat YoY (decline ~3% QoQ) in
Q2FY12 at 9.19 MT. Blended realisation is expected to decline ~8% QoQ to |
4256/tonne but increase ~22% YoY. Blended EBITDA is expected to decline ~31%
QoQ to | 861/tonne (increase ~94% YoY)
Shree Cement We expect cement sales volumes to increase ~8% YoY (decline ~7% QoQ) to 2.51
MT in Q2FY12. Cement realisations are expected to decline ~12% QoQ to |
3005/tonne. We estimate merchant power sales volume of ~240 million units at
realisation of | 4.35 per unit. Cement EBITDA is expected to decline ~40% YoY (~9%
QoQ) to | 529/tonne
India Cement Sales volume is expected to decline ~1% YoY (increase ~16% QoQ) to 2.68 MT in
Q2FY12. Cement realisation is expected to decline ~2% QoQ to | 4048/tonne (up
~39% YoY due to strong pricing discipline in the southern region). We estimate
EBITDA will decline ~19% QoQ to | 847/tonne
JK Cement Blended sales volume (grey & white) is expected to remain flat YoY (decline ~11%
QoQ) to 1.26 MT in Q2FY12. The blended realisation is expected to decline ~7% QoQ
to | 3976/tonne. EBITDA is expected to decline ~50% QoQ to | 456 per tonne
JK Lakshmi
Cement
The cement sales volume is expected to increase ~1% YoY to 0.96 MT but decline
~15% QoQ. The realisation is expected to decline ~13% QoQ to | 3023/tonne.
EBITDA is expected to decline ~76% QoQ (decline ~46% YoY) to | 156/tonne
Heidelberg
Cement
We expect the sales volume to increase ~7% YoY (decline ~19% QoQ to 0.59 MT in
Q3CY11. We expect the realisation to decline ~12% QoQ (decline ~2% YoY) to |
3024/tonne. EBITDA is expected to decline ~65% QoQ (increase ~28% YoY) to |
110/tonne
Orient Paper Cement sales volume is expected to decline ~4% YoY (decline ~6% QoQ) to 0.84
MT. Cement realisation is expected to decline ~3% QoQ to | 3572/tonne (up ~55%
YoY due to strong pricing discipline in the southern region). Cement EBIT is expected
to decline ~17% QoQ to | 1046/tonne. We expect the loss of | 3 crore in the paper
segment at the EBIT level while EBIT margin was ~7% in the fan segment
Birla Corp Sales volume is expected to increase ~6% YoY (decline ~3% QoQ to 1.48 MT). The
realisation is expected to decline ~4% YoY (~13% QoQ) to | 2973/tonne. Blended
EBITDA is expected to decline ~43% YoY (~68% QoQ) to | 314/tonne
Mangalam
Cement
Sales volume is expected to decline ~8% YoY (~3% QoQ) to 0.35 MT in Q2FY12. We
expect cement realisations to decline ~13% QoQ (increase ~2% YoY) to | 3048 per
tonne. The EBITDA is expected to decline ~76% QoQ to | 146/tonne but is expected
to increase ~88% YoY
Source: Company, ICICIdirect.com Research
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