Cement Sector Seasonal uptick in prices continue ::Emkay

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Cement Sector

Seasonal uptick in prices continue

n     All India avg cement prices up by 3.3% mom (+Rs9/bag). Eastern (+Rs21/bag) & Northern (+Rs13/bag) region see sharp price hikes followed by Western region (Rs9/bag)

n     Despite the political issues and monsoons dragging cement offtake in the Tamil Nadu region, prices hold fort. Dealers expect further hikes in western and northern parts

n     Cost push likely to continue in Dec-11 quarter led by 1. Higher e-auction coal prices (as CIL’s E auction coal was diverted to power companies in Oct) 2. Imported coal prices going up led by Rupee depreciation 3. Hike in surcharges by railways 

n     Though July-Oct 2011 dispatches grew +4.6% on low base, demand yet to reflect strength. Solid demand picks up remains a key trigger to sustain the ensuing seasonal price uptick. Remain sector NEUTRAL.Prefer ACC,SRCM & Grasim