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Sept dispatches weak: Despatches reported by the 4 large players-
ACC, ACEM, UTCEM and JPA (NR), stood at 7.39MT, down 5% m/m
but up 4.4% y/y. The sequential decline is surprising given that rains had
reduced from August, highlighting our view that demand recovery
remains tepid on the ground. Players with exposure to North/Central
India like Ambuja and Jaypee reported sequential growth of 2-3%, while
ACC and UTCEM volumes declined 8% and 10% respectively. While
y/y comparison during monsoon is difficult as it can vary depending on
the rainfall in that particular month, ACC and Jaypee continued to gain
market share with YTD growth in despatches of 15.3% and 9.3%,
respectively. UTCEM and ACEM continue to lag the overall industry
performance with YTD growth flat and +3% respectively versus Big 4
despatches growth of 5.5%.
Prices improve in anticipation of demand: After the decline in prices
in most markets during the monsoon (South India witnessed modest
decline versus other regions), prices started to improve during Sept.
Prices have increased sharply in September in North and Central India
(up nearly 9-12% during the month), which witnessed large declines
during Jun-Aug. However, pricing increase in West India market has
lagged neighboring North India market, given concerns on the supply
from the oversupplied AP market. Our dealer checks indicate that
demand is yet to return, post the rains the price increase is partly driven
by lower supply and also by anticipation of improvement in demand post
the monsoon and festivals.
Cement earnings preview- Sept a very weak quarter: Sep quarter is
seasonally weak given the impact from monsoon on despatches and
prices. Cement players would see cost escalation from full impact of
higher domestic coal prices and freight (driven by the diesel price hike in
end-June). Cement prices, we estimate, declined by 7-8% across
North/Central and Eastern India while broadly remaining flat in South
India. Hence while EBITDA/MT should be higher on y/y level (given
absolute level of prices were higher y/y), q/q decline is likely to be
material.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sept dispatches weak: Despatches reported by the 4 large players-
ACC, ACEM, UTCEM and JPA (NR), stood at 7.39MT, down 5% m/m
but up 4.4% y/y. The sequential decline is surprising given that rains had
reduced from August, highlighting our view that demand recovery
remains tepid on the ground. Players with exposure to North/Central
India like Ambuja and Jaypee reported sequential growth of 2-3%, while
ACC and UTCEM volumes declined 8% and 10% respectively. While
y/y comparison during monsoon is difficult as it can vary depending on
the rainfall in that particular month, ACC and Jaypee continued to gain
market share with YTD growth in despatches of 15.3% and 9.3%,
respectively. UTCEM and ACEM continue to lag the overall industry
performance with YTD growth flat and +3% respectively versus Big 4
despatches growth of 5.5%.
Prices improve in anticipation of demand: After the decline in prices
in most markets during the monsoon (South India witnessed modest
decline versus other regions), prices started to improve during Sept.
Prices have increased sharply in September in North and Central India
(up nearly 9-12% during the month), which witnessed large declines
during Jun-Aug. However, pricing increase in West India market has
lagged neighboring North India market, given concerns on the supply
from the oversupplied AP market. Our dealer checks indicate that
demand is yet to return, post the rains the price increase is partly driven
by lower supply and also by anticipation of improvement in demand post
the monsoon and festivals.
Cement earnings preview- Sept a very weak quarter: Sep quarter is
seasonally weak given the impact from monsoon on despatches and
prices. Cement players would see cost escalation from full impact of
higher domestic coal prices and freight (driven by the diesel price hike in
end-June). Cement prices, we estimate, declined by 7-8% across
North/Central and Eastern India while broadly remaining flat in South
India. Hence while EBITDA/MT should be higher on y/y level (given
absolute level of prices were higher y/y), q/q decline is likely to be
material.
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