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India Equity Research Reports, IPO and Stock News
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http://www.kotaksecurities.com/pdf/dmb/MorningInsight02042012.pdf
ULTRATECH CEMENTS
PRICE: RS.1507 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.1592 FY13E P/E:16.5X
GRASIM INDUSTRIES
PRICE: RS.2629 RECOMMENDATION: BUY
TARGET PRICE: RS.3109 FY13E P/E: 9.5X
‰ We recently met with the management of Grasim and Ultratech Cements
to get insights about cement and VSF demand and pricing scenario.
‰ Cement demand continues to remain high due to spurt in infrastructure
activity primarily in western and northern region.
‰ VSF prices have stabilized and pulp prices are also softening. This can aid
margin improvement.
‰ With excellent ordering seen in the road segment and pre-election spending for infrastructure projects in Gujarat, we expect cement demand to
remain strong going forward. Cement prices are also expected to remain
strong for next two quarters till monsoons. We thus revise our estimates
for Ultratech Cements and Grasim Industries to factor in improved pricing and volumes for FY13 and continue to maintain our positive bias for
both the companies.
‰ We thus continue to maintain ACCUMULATE on Ultratech Cements and
would advise investors to use declines in the stock to buy (Price target Rs
1592) and BUY on Grasim Industries (Price target Rs 3109 )
Key highlights about the company
Cement demand and pricing
Cement demand has been witnessing an improvement since past few months with
improvement in the demand from infrastructure segment as well as residential real
estate segment. Cement prices have also remained strong after witnessing declines
in Dec, 2011 to Jan, 2012. Prices have moved up in line with improvement in cement demand as well as increase in cost pressures. Company's domestic dispatches
stand at nearly 35.7MT for Apr,11-Feb,12 vis-a-vis 34.57MT for the full year in FY11.
Though prices have moved up but margins may remain at similar levels on sequential basis since cost pressures continue to remain high. Freight cost per tonne may
remain high going forward due to hike in railway freight rates as well as expected
increase in diesel prices. Power and fuel cost per tonne may also remain high due to
expected increase in domestic coal prices by Coal India. Imported coal prices have
come down in past few quarters but corresponding rupee depreciation has netted off
its impact to some extent
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/dmb/MorningInsight02042012.pdf
ULTRATECH CEMENTS
PRICE: RS.1507 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.1592 FY13E P/E:16.5X
GRASIM INDUSTRIES
PRICE: RS.2629 RECOMMENDATION: BUY
TARGET PRICE: RS.3109 FY13E P/E: 9.5X
‰ We recently met with the management of Grasim and Ultratech Cements
to get insights about cement and VSF demand and pricing scenario.
‰ Cement demand continues to remain high due to spurt in infrastructure
activity primarily in western and northern region.
‰ VSF prices have stabilized and pulp prices are also softening. This can aid
margin improvement.
‰ With excellent ordering seen in the road segment and pre-election spending for infrastructure projects in Gujarat, we expect cement demand to
remain strong going forward. Cement prices are also expected to remain
strong for next two quarters till monsoons. We thus revise our estimates
for Ultratech Cements and Grasim Industries to factor in improved pricing and volumes for FY13 and continue to maintain our positive bias for
both the companies.
‰ We thus continue to maintain ACCUMULATE on Ultratech Cements and
would advise investors to use declines in the stock to buy (Price target Rs
1592) and BUY on Grasim Industries (Price target Rs 3109 )
Key highlights about the company
Cement demand and pricing
Cement demand has been witnessing an improvement since past few months with
improvement in the demand from infrastructure segment as well as residential real
estate segment. Cement prices have also remained strong after witnessing declines
in Dec, 2011 to Jan, 2012. Prices have moved up in line with improvement in cement demand as well as increase in cost pressures. Company's domestic dispatches
stand at nearly 35.7MT for Apr,11-Feb,12 vis-a-vis 34.57MT for the full year in FY11.
Though prices have moved up but margins may remain at similar levels on sequential basis since cost pressures continue to remain high. Freight cost per tonne may
remain high going forward due to hike in railway freight rates as well as expected
increase in diesel prices. Power and fuel cost per tonne may also remain high due to
expected increase in domestic coal prices by Coal India. Imported coal prices have
come down in past few quarters but corresponding rupee depreciation has netted off
its impact to some extent
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