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Monsoon effect seen in prices; decline MoM
Average cement prices decline in August
All-India cement prices declined on a month on month (MoM) basis.
Average prices were reported at | 312/bag during August from | 323/bag in
July. After defying monsoon pressure during the previous month, prices
finally declined during August due to lower demand on account of the
monsoon season.
Monsoon impact leads to decline in prices
Overall cement prices in India declined MoM. The lowest decline was seen
in central and southern regions. The decline in prices is on expected lines
due to monsoons. Average prices in the central region declined by | 4 /bag
on an MoM basis to | 301/bag during August with a major decline in
Ghaziabad and Indore where prices declined by | 6/bag and | 5/bag,
respectively. In the southern region, the average decline in prices was by
| 5/bag with a decline of | 10-12/bag in Bangalore, Chennai and Kochi while
Hyderabad saw a defiant trend with a price increase of | 11/bag. In the
western region, prices in Gujarat declined by almost ~| 30/bag while
Maharashtra also faced a price correction of | 6/bag to | 13/bag. With this,
the average decline in the western region remained at | 16/bag with a price
of | 325/bag. Northern and eastern regions registered a price decline of
| 15/bag each MoM. Average price in the northern region stayed at
| 284/bag post correction with highest decline in Jalandhar and Gurgaon. In
the eastern region, average prices remained at | 317/bag with price decline
in the range of | 9/bag to | 17/bag in various regions. Overall, August 2014
witnessed demand pressure after registering an improvement in demand
during Q1FY15 (with average YoY production growth of 9.67%) due to the
monsoon season. However, we expect demand to improve along with an
increase in prices once monsoon season ends.
Large caps trading at premium to current replacement costs
Large cap stocks like Ambuja, UltraTech and Shree Cement have now
reached their fair valuations after a sharp rally in the previous three months
due to favourable election outcome. However, the midcap space has still
potential for further upside from current levels. In the midcap space, we like
the business fundamentals of JK Cement (doubling white cement capacity),
JK Lakshmi Cement (strong presence in north) and Heidelberg (operating
leverage and cost efficiency measures). In small caps, we still like
Mangalam Cement after a sharp rally due to its attractive valuations.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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Monsoon effect seen in prices; decline MoM
Average cement prices decline in August
All-India cement prices declined on a month on month (MoM) basis.
Average prices were reported at | 312/bag during August from | 323/bag in
July. After defying monsoon pressure during the previous month, prices
finally declined during August due to lower demand on account of the
monsoon season.
Monsoon impact leads to decline in prices
Overall cement prices in India declined MoM. The lowest decline was seen
in central and southern regions. The decline in prices is on expected lines
due to monsoons. Average prices in the central region declined by | 4 /bag
on an MoM basis to | 301/bag during August with a major decline in
Ghaziabad and Indore where prices declined by | 6/bag and | 5/bag,
respectively. In the southern region, the average decline in prices was by
| 5/bag with a decline of | 10-12/bag in Bangalore, Chennai and Kochi while
Hyderabad saw a defiant trend with a price increase of | 11/bag. In the
western region, prices in Gujarat declined by almost ~| 30/bag while
Maharashtra also faced a price correction of | 6/bag to | 13/bag. With this,
the average decline in the western region remained at | 16/bag with a price
of | 325/bag. Northern and eastern regions registered a price decline of
| 15/bag each MoM. Average price in the northern region stayed at
| 284/bag post correction with highest decline in Jalandhar and Gurgaon. In
the eastern region, average prices remained at | 317/bag with price decline
in the range of | 9/bag to | 17/bag in various regions. Overall, August 2014
witnessed demand pressure after registering an improvement in demand
during Q1FY15 (with average YoY production growth of 9.67%) due to the
monsoon season. However, we expect demand to improve along with an
increase in prices once monsoon season ends.
Large caps trading at premium to current replacement costs
Large cap stocks like Ambuja, UltraTech and Shree Cement have now
reached their fair valuations after a sharp rally in the previous three months
due to favourable election outcome. However, the midcap space has still
potential for further upside from current levels. In the midcap space, we like
the business fundamentals of JK Cement (doubling white cement capacity),
JK Lakshmi Cement (strong presence in north) and Heidelberg (operating
leverage and cost efficiency measures). In small caps, we still like
Mangalam Cement after a sharp rally due to its attractive valuations.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Link
http://content.icicidirect.com/mailimages/IDirect_CementMonthly_Aug2014.pdf
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