Cement Sector Price hikes gain pace n Emkay,

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Cement Sector

Price hikes gain pace

n     Avg cement prices up by 6.6% mom (+Rs16/bag). Producers cut supplies to non-trade segment in north & central  to exploit the premium in the trade segment

n     North (+Rs23/bag) & Central (+Rs24/bag) region see sharp price hikes followed by Eastern region (Rs21/bag). Dealers expect further hikes

n     Sharp price hikes led by very short Pre-Diwali construction season this year (~25 days vs 40-45 days) coupled with rollback of discounts simultaneously

n     Unavailability of sand impacted cement offtake in western region while monsoon and the fluid political situation in Telangana continue to hamper consumption in south

n     Cost push likely to continue led by shortage of coal & hike in surcharges by railways in Oct-11. Though Q2FY12 dispatches grew +6% on low base, demand yet to reflect strength.

n     Solid demand pick up remains a key trigger to sustain the ensuing seasonal price uptick. Prefer ACC,SRCM & Grasim. Maintain REDUCE on ACEM & UTCEM