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July’ 11 dispatches revives on lower base…
Cement majors report ~16% YoY growth in dispatches
In July 2011, major cement players reported dispatch growth in the range
of 7-30% YoY on the back of lower base, delay in monsoon and inventory
build-up by the dealers. ACC reported 28% YoY growth in dispatches to
2.0 MT on account of Chanda capacity expansion coupled with lower base
in July 2010. Shree Cement & JK Lakshmi reported dispatch growth of
20% YoY (0.85 MT) & 30% YoY (0.38 MT). Also, during the month,
Ambuja reported dispatches of 1.70 MT (14% YoY) and Jaypee reported
1.45 MT (19% YoY). Ultratech Cement reported dispatch growth of 7%
YoY to 3.13 MT. Hence, on an aggregate basis, the volumes of the major
six players have been ~16% YoY in July 2011.
On a MoM basis, cement volumes remained subdued and the growth has
been 0.8% in July 2011 for the six companies. ACC and Jaypee reported
5-6% MoM growth in dispatches on the back of increase in dealer
stockings. Ambuja & Shree reported almost flat dispatch growth on a
MoM basis while Ultratech & JK Lakshmi reported decline of 2-3%.
Overall, we expect industry dispatch growth at ~17% YoY in July 2011 on
the back of lower base in July 2010. However, cement demand has been
sluggish (flat MoM) on account of a slowdown in construction activities.
Cement prices decline further by | 5-25 per bag MoM in July 2011
After correcting | 5-20 per bag in June 2011, cement prices have declined
further by | 5-20 per bag in July 2011 across all regions (except south) as
cement demand remained sluggish during June-July 2011. In the North
and Central region, prices have declined by ~| 10-25 per bag MoM while
prices have sustained in the southern region and remained flat on MoM.
We expect cement prices will be under pressure till the Oct 2011 due to
onset of monsoon season.
Industry outlook
We expect the All India cement consumption to grow by ~6% YoY in
FY12E as we expect demand to remain under pressure on account of key
issues like rising cost of capital, land acquisition, clearances &
unavailability of key raw materials. The utilisation rate is expected to
decline to 76% in FY12E as the incremental demand of 12.5 MT is likely to
be negated by ~18 MT of capacity additions. We expect the rate to start
improving from FY13E (79%) as the incremental demand (~20 MT) to
keep pace with effective capacity addition (~23 MT).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
July’ 11 dispatches revives on lower base…
Cement majors report ~16% YoY growth in dispatches
In July 2011, major cement players reported dispatch growth in the range
of 7-30% YoY on the back of lower base, delay in monsoon and inventory
build-up by the dealers. ACC reported 28% YoY growth in dispatches to
2.0 MT on account of Chanda capacity expansion coupled with lower base
in July 2010. Shree Cement & JK Lakshmi reported dispatch growth of
20% YoY (0.85 MT) & 30% YoY (0.38 MT). Also, during the month,
Ambuja reported dispatches of 1.70 MT (14% YoY) and Jaypee reported
1.45 MT (19% YoY). Ultratech Cement reported dispatch growth of 7%
YoY to 3.13 MT. Hence, on an aggregate basis, the volumes of the major
six players have been ~16% YoY in July 2011.
On a MoM basis, cement volumes remained subdued and the growth has
been 0.8% in July 2011 for the six companies. ACC and Jaypee reported
5-6% MoM growth in dispatches on the back of increase in dealer
stockings. Ambuja & Shree reported almost flat dispatch growth on a
MoM basis while Ultratech & JK Lakshmi reported decline of 2-3%.
Overall, we expect industry dispatch growth at ~17% YoY in July 2011 on
the back of lower base in July 2010. However, cement demand has been
sluggish (flat MoM) on account of a slowdown in construction activities.
Cement prices decline further by | 5-25 per bag MoM in July 2011
After correcting | 5-20 per bag in June 2011, cement prices have declined
further by | 5-20 per bag in July 2011 across all regions (except south) as
cement demand remained sluggish during June-July 2011. In the North
and Central region, prices have declined by ~| 10-25 per bag MoM while
prices have sustained in the southern region and remained flat on MoM.
We expect cement prices will be under pressure till the Oct 2011 due to
onset of monsoon season.
Industry outlook
We expect the All India cement consumption to grow by ~6% YoY in
FY12E as we expect demand to remain under pressure on account of key
issues like rising cost of capital, land acquisition, clearances &
unavailability of key raw materials. The utilisation rate is expected to
decline to 76% in FY12E as the incremental demand of 12.5 MT is likely to
be negated by ~18 MT of capacity additions. We expect the rate to start
improving from FY13E (79%) as the incremental demand (~20 MT) to
keep pace with effective capacity addition (~23 MT).
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