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Cement
Cement volumes grew by ~9% YoY in Q3FY12
All India cement demand is expected to post ~9% YoY growth in
Q3FY12 as the dispatches grew ~10% YoY in Oct-Nov 2011 and ~9%
YoY growth expected in Dec 2011. Volume growth is mainly backed by
significant rise in dispatches in Nov 2011 when it grew ~20% YoY on
account of lower base. On sequential basis too, the cement demand is
expected to grow ~8% as the volumes were muted in Q2FY12 on
account of slowdown in construction activities due to monsoon season.
However, we believe that the demand is weak at the ground level as the
YTDFY12 (Apr-Nov 2011) demand growth of ~5% YoY is still below the
long term average growth of ~10%. For our cement coverage universe,
we expect cement volume growth at ~9% YoY and ~11% QoQ.
Cement prices increased ~| 20/bag QoQ during Q3FY12
All India average cement prices increased by ~| 20/bag during
Q3FY12E in anticipation of demand pick up after monsoon. Prices
started picking up from Sep’11 & showed good strength till Nov’11.
Average retail prices in northern, central and eastern region witnessed
an increase of ~| 20-30/bag QoQ to | 268/bag, | 255/bag and | 253/bag
respectively. Prices in western too, increased by ~| 25/bag QoQ to |
278/bag while prices in southern region increased marginally by ~|
7/bag to | 260/bag.
Input costs on an uptrend
Cost pressure has further increased during the quarter mainly on
account of increase in power & fuel cost and freight cost. Shortage of
domestic linkage coal led to shift towards purchase from e-auctions &
imports. However, the international coal prices have declined by ~7%
QoQ but the impact of correction has been negated by ~11% QoQ
depreciation in rupee. Also, the increase in railway freight rates to
impact the cement companies by | 25/tonne in the quarter.
Operating margin of cement universe to increase by ~421 bps QoQ
Aggregate revenue of our cement coverage universe is expected to
increase by ~31% YoY (~20% QoQ) on account of volume growth of
~9% YoY (~11% QoQ) and increase in realisations by ~20% YoY (~8%
QoQ). The EBITDA margin of our coverage universe is expected to
increase by ~271 bps YoY (~421 bps QoQ) to ~19% in Q3FY12E due to
higher realisations. Bottomline of our coverage universe is expected to
increase by ~47% YoY and ~67% QoQ.
Company specific view
Company Remarks
ACC Cement sales volume is expected to increase ~6% YoY (~3% QoQ) to 5.89 MT in
Q4CY11. We estimate net realisation to increase ~18% QoQ to | 4129/tonne (up
| 350/tonne QoQ). EBITDA is expected to increase ~66% YoY and ~61% QoQ to
| 624/tonne.
Ambuja Cement Cement sales volume is expected to increase ~10% YoY (~18% QoQ) to 5.54 MT
in Q4CY11. We expect cement realisation to increase ~20% YoY (~10% QoQ) to
| 4249/tonne (up | 350/tonne QoQ). EBITDA is expected to increase ~56% YoY
and ~57% QoQ to | 972/tonne
UltraTech
Cement
The blended sales volume is expected to increase ~5% YoY (~12% QoQ) in
Q3FY12 at 10.3 MT. Blended realisation is expected to increase ~21% YoY to |
4591/tonne (increase ~| 350/tonne QoQ). Blended EBITDA is expected to
increase ~21% YoY (~39% QoQ) to | 878/tonne.
Shree Cement We expect cement sales volumes to increase ~11% YoY (~17% QoQ) to 2.92 MT
in Q3FY12. Cement realisations are expected to increase ~32% YoY (~10% QoQ)
to | 3762/tonne. We estimate merchant power sales volume of ~300 million
units at realisation of | 4.2 per unit. Cement EBITDA is expected to increase
significantly by ~89% YoY (~31% QoQ) to | 1049/tonne.
India Cement Sales volume is expected to increase ~17% YoY (down ~2% QoQ) to 2.39 MT in
Q3FY12. Cement realisation is expected to increase ~17% YoY to | 4273/tonne
(up ~| 50/tonne QoQ) as the prices remained almost flat during the quarter in the
southern region). We estimate EBITDA to increase ~30% YoY to | 805/tonne
JK Cement Blended sales volume (grey & white) is expected to increase ~5% YoY (~7%
QoQ) to 1.34 MT in Q3FY12. The blended realisation is expected to increase
~16% YoY (~6% QoQ) to | 4330/tonne. Blended EBITDA is expected to increase
~61% YoY and ~44% QoQ to | 685 per tonne
JK Lakshmi
Cement
The cement sales volume is expected to increase ~10% YoY (~5% QoQ) to 1.19
MT in Q3FY12. The realisation is expected to increase ~20% YoY (~11% QoQ) to
| 3498/tonne. EBITDA is expected to increase significantly on YoY basis to |
625/tonne in Q3FY12 from | 229/tonne in Q3FY11.
Heidelberg
Cement
We expect the sales volume to increase ~15% YoY (~15% QoQ) to 0.75 MT in
Q4CY11. We expect the realisation to increase ~21% YoY (~11% QoQ) to |
3493/tonne. EBITDA is expected at | 243/tonne in Q4CY11 against loss of |
91/tonne in Q4CY10 and loss of | 99/tonne in Q3CY11.
Orient Paper Cement sales volume is expected to increase ~23% YoY (~14% QoQ) to 0.95 MT.
Cement realisation is expected to increase ~24% YoY (~4% QoQ) to |
3697/tonne. Cement EBIT is expected to increase ~28% YoY (~14% QoQ) to |
777/tonne. In Electrical division, we expect EBIT margin at 2% against ~8% in
Q3FY11, while in Paper segment, we expect the loss of | 10 crore at the EBIT
level.
Birla Corp Cement sales volume is expected to increase ~8% YoY (~12% QoQ to 1.57 MT in
Q3FY12. The cement realisation is expected to increase ~19% YoY (~11% QoQ)
to | 3596/tonne. Cement EBIT is expected to increase ~5% YoY to | 456/tonne.
Mangalam
Cement
Sales volume is expected to increase ~27% YoY (~37% QoQ) to 0.51 MT in
Q3FY12. We expect cement realisation to increase ~35% YoY (~10% QoQ) to |
3720 per tonne. The EBITDA is expected to increase sharply to | 430/tonne in
Q3FY12 from | 54/tonne in Q3FY11 and | 202/tonne in Q2FY12.
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cement
Cement volumes grew by ~9% YoY in Q3FY12
All India cement demand is expected to post ~9% YoY growth in
Q3FY12 as the dispatches grew ~10% YoY in Oct-Nov 2011 and ~9%
YoY growth expected in Dec 2011. Volume growth is mainly backed by
significant rise in dispatches in Nov 2011 when it grew ~20% YoY on
account of lower base. On sequential basis too, the cement demand is
expected to grow ~8% as the volumes were muted in Q2FY12 on
account of slowdown in construction activities due to monsoon season.
However, we believe that the demand is weak at the ground level as the
YTDFY12 (Apr-Nov 2011) demand growth of ~5% YoY is still below the
long term average growth of ~10%. For our cement coverage universe,
we expect cement volume growth at ~9% YoY and ~11% QoQ.
Cement prices increased ~| 20/bag QoQ during Q3FY12
All India average cement prices increased by ~| 20/bag during
Q3FY12E in anticipation of demand pick up after monsoon. Prices
started picking up from Sep’11 & showed good strength till Nov’11.
Average retail prices in northern, central and eastern region witnessed
an increase of ~| 20-30/bag QoQ to | 268/bag, | 255/bag and | 253/bag
respectively. Prices in western too, increased by ~| 25/bag QoQ to |
278/bag while prices in southern region increased marginally by ~|
7/bag to | 260/bag.
Input costs on an uptrend
Cost pressure has further increased during the quarter mainly on
account of increase in power & fuel cost and freight cost. Shortage of
domestic linkage coal led to shift towards purchase from e-auctions &
imports. However, the international coal prices have declined by ~7%
QoQ but the impact of correction has been negated by ~11% QoQ
depreciation in rupee. Also, the increase in railway freight rates to
impact the cement companies by | 25/tonne in the quarter.
Operating margin of cement universe to increase by ~421 bps QoQ
Aggregate revenue of our cement coverage universe is expected to
increase by ~31% YoY (~20% QoQ) on account of volume growth of
~9% YoY (~11% QoQ) and increase in realisations by ~20% YoY (~8%
QoQ). The EBITDA margin of our coverage universe is expected to
increase by ~271 bps YoY (~421 bps QoQ) to ~19% in Q3FY12E due to
higher realisations. Bottomline of our coverage universe is expected to
increase by ~47% YoY and ~67% QoQ.
Company specific view
Company Remarks
ACC Cement sales volume is expected to increase ~6% YoY (~3% QoQ) to 5.89 MT in
Q4CY11. We estimate net realisation to increase ~18% QoQ to | 4129/tonne (up
| 350/tonne QoQ). EBITDA is expected to increase ~66% YoY and ~61% QoQ to
| 624/tonne.
Ambuja Cement Cement sales volume is expected to increase ~10% YoY (~18% QoQ) to 5.54 MT
in Q4CY11. We expect cement realisation to increase ~20% YoY (~10% QoQ) to
| 4249/tonne (up | 350/tonne QoQ). EBITDA is expected to increase ~56% YoY
and ~57% QoQ to | 972/tonne
UltraTech
Cement
The blended sales volume is expected to increase ~5% YoY (~12% QoQ) in
Q3FY12 at 10.3 MT. Blended realisation is expected to increase ~21% YoY to |
4591/tonne (increase ~| 350/tonne QoQ). Blended EBITDA is expected to
increase ~21% YoY (~39% QoQ) to | 878/tonne.
Shree Cement We expect cement sales volumes to increase ~11% YoY (~17% QoQ) to 2.92 MT
in Q3FY12. Cement realisations are expected to increase ~32% YoY (~10% QoQ)
to | 3762/tonne. We estimate merchant power sales volume of ~300 million
units at realisation of | 4.2 per unit. Cement EBITDA is expected to increase
significantly by ~89% YoY (~31% QoQ) to | 1049/tonne.
India Cement Sales volume is expected to increase ~17% YoY (down ~2% QoQ) to 2.39 MT in
Q3FY12. Cement realisation is expected to increase ~17% YoY to | 4273/tonne
(up ~| 50/tonne QoQ) as the prices remained almost flat during the quarter in the
southern region). We estimate EBITDA to increase ~30% YoY to | 805/tonne
JK Cement Blended sales volume (grey & white) is expected to increase ~5% YoY (~7%
QoQ) to 1.34 MT in Q3FY12. The blended realisation is expected to increase
~16% YoY (~6% QoQ) to | 4330/tonne. Blended EBITDA is expected to increase
~61% YoY and ~44% QoQ to | 685 per tonne
JK Lakshmi
Cement
The cement sales volume is expected to increase ~10% YoY (~5% QoQ) to 1.19
MT in Q3FY12. The realisation is expected to increase ~20% YoY (~11% QoQ) to
| 3498/tonne. EBITDA is expected to increase significantly on YoY basis to |
625/tonne in Q3FY12 from | 229/tonne in Q3FY11.
Heidelberg
Cement
We expect the sales volume to increase ~15% YoY (~15% QoQ) to 0.75 MT in
Q4CY11. We expect the realisation to increase ~21% YoY (~11% QoQ) to |
3493/tonne. EBITDA is expected at | 243/tonne in Q4CY11 against loss of |
91/tonne in Q4CY10 and loss of | 99/tonne in Q3CY11.
Orient Paper Cement sales volume is expected to increase ~23% YoY (~14% QoQ) to 0.95 MT.
Cement realisation is expected to increase ~24% YoY (~4% QoQ) to |
3697/tonne. Cement EBIT is expected to increase ~28% YoY (~14% QoQ) to |
777/tonne. In Electrical division, we expect EBIT margin at 2% against ~8% in
Q3FY11, while in Paper segment, we expect the loss of | 10 crore at the EBIT
level.
Birla Corp Cement sales volume is expected to increase ~8% YoY (~12% QoQ to 1.57 MT in
Q3FY12. The cement realisation is expected to increase ~19% YoY (~11% QoQ)
to | 3596/tonne. Cement EBIT is expected to increase ~5% YoY to | 456/tonne.
Mangalam
Cement
Sales volume is expected to increase ~27% YoY (~37% QoQ) to 0.51 MT in
Q3FY12. We expect cement realisation to increase ~35% YoY (~10% QoQ) to |
3720 per tonne. The EBITDA is expected to increase sharply to | 430/tonne in
Q3FY12 from | 54/tonne in Q3FY11 and | 202/tonne in Q2FY12.
Source: Company, ICICIdirect.com Research
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