Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
S A A R T H I
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
SEBI
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
IPOs
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Research
Arbitrages
Equity
Market Whispers
Tax Planning
Home
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
Research

| More

Cement - 3QFY17 Results Review - A Quiet Quarter - Impacted by Cash Crunch - Reliance Securities

Posted On: 2017-02-23 20:04:27

Sector Review

Cement industry''s 3QFY17 performance was impacted by demonetization drive, which adversely affected demand from IHB and select real estate segment. Despite demand up-tick in Dec''16 owing to calendar year end impact, cement companies under our coverage universe registered a flat YoY growth. Healthy operating efficiencies aided the companies to stay afloat in terms of operating performance. The companies under our coverage witnessed an average EBITDA growth of 4% YoY, despite 2.5% YoY and 6.2% YoY rise in Power & Fuel and Freight cost, respectively. Realizations continued to remain soft despite moderate recovery in Oct''16, as the industry saw an average ~1% sequential contraction in realization.

Notably, most Southern companies recorded healthy volume growth (in double-digit) led by a sharp up-tick in project segment sales and higher banking penetration, which aided in negating the impact of demonetization. UltraTech, JK Lakshmi Cement and Ramco Cements displayed best operating efficiencies as their operating cost/tonne declined by ~3-4% YoY. Holcim (ACC & Ambuja) group saw maximum contraction in sales volume (down 8-9% YoY), whereas India Cements and Ramco Cements witnessed sharpest recovery (+22% YoY for both) in volume. The companies, which reported EBITDA/tonne above Rs750 are: UltraTech (Rs890), Shree Cement (Rs975), Ramco Cements (Rs1,319) and India Cements (Rs797). Looking ahead, we believe performance of cement companies would improve further on the back of likely improvement in realizations and volume.

Volume Impacted by Demonetization

Contrary to the expected sharp recovery in demand owing to favourable monsoon, demonetization drive in early Nov''16 led to a sudden lull in volume growth. The impact of demonetization was noticeably visible in IHB segment, which accounts for >50% of total cement consumption. Consequently, the companies under our coverage saw a flat YoY growth in sales volume. However, most Southern companies recorded healthy volume growth (in double-digit) led by a sharp up-tick in project segment sales and higher banking penetration, which aided in negating the impact of demonetization.

Overall Realization Scenario Remained Dismal

Realization environment was subdued as the companies in our coverage universe saw ~1% sequential decline (flat on YoY comparison) in average realizations. Notably, as per our channel checks done at Dec''16 end, the trade segment price in Western, Northern and Central regions had witnessed 6-7% YoY improvement. However, increased contribution of non-trade segment sales (which commands Rs20-40/bag lower price than trade segment) impacted blended realizations. Looking ahead, we expect that the increasing contribution of non-trade segment sales in ensuing quarters may prevant the companies to report any significant jump in their average realizations.

Operating Cost Broadly Remained Stable despite Surge in Fuel Prices

Though fuel prices especially petcoke surged significantly in 3QFY17 (to the extent of Rs400-500/tonne), operating costs of the industry largely remained stable barring few companies. A consistent endeavour to improve operating synergies though improving fuel mix, reducing lead distance by setting up new GUs, railway sidings, etc aided industry to withstand the impact of higher fuel prices. The companies, which reported EBITDA/tonne above Rs750 are: UltraTech (Rs890), Shree Cement (Rs975), Ramco Cements (Rs1,319) and India Cements (Rs797) on healthy volume and operating efficiencies. Looking ahead, we believe the operating performance of cement companies would improve further on the back of improved utilizations, unlikelihood of any further rise in fuel costs and expected improvement in realizations in busy season.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

The Pitch Report: Karnataka Bank Ltd - BUY - TP Rs.220 - Kotak
Company Update: Voltas Ltd - ACCUMULATE - TP Rs.500 - Kotak
Technology: Accenture-tightens revenue growth guidance band - Kotak
Metals & Mining (Attractive): India Steel-on a recovery path - Kotak
Nasscom guides for 7-8% growth, lower than 8.6% in c/c of FY2017 - Kotak
Technology: Nasscom guidance - Decelerating growth trend continues - Kotak
Company Visit Note: Huhtamaki PPL Ltd (HPPL) - NOT RATED - Kotak
Company Update: Shipping Corporation of India - BUY - TP Rs.110 - Kotak
IT Industry to grow at 8-9% in FY2018; Nasscom: Angel Broking
Lupin - USFDA update: Angel Broking
Company Visit Note: The Mandhana Retail Ventures Ltd - NOT RATED - Kotak
Banks : Offers protection in adverse conditions - A deeper study into Pradhan Mantri Fasal Bima Yojana - Agriculture Insurance scheme - Kotak
Energy - downstream PSUs: When the tide turns - Kotak
Company Update: Mahindra and Mahindra (M&M) - BUY - TP Rs.1565 - Kotak
Maharashtra government removes cap on taxi / auto licenses: Angel Broking
IPCA Labs - USFDA update: Angel Broking
Company Update: Gujarat State Petronet Ltd (GSPL) - ACCUMULATE - TP Rs.182 - Kotak
Management Meet Update - Zensar Technologies - CSEC Research
Company Update: VRL Logistics Ltd - BUY - TP Rs.375 - Kotak
Strategy: The impossible trinity of farm income - Kotak
Banks : Private banks accelerate gains on CASA : Deeper study into deposit profile of banks for FY2016 - Kotak
Company Update: Blue Star - ACCUMULATE - TP Rs.684 - Kotak
Banking : RBI gets into action - Kotak
Dr Reddy's - EIR for its Miryalaguda API plant: Angel Broking
Eris Lifesciences Limited - IPO Note - Angel Broking
Banks: Maharashtra announces farm loan waiver - Kotak
Company Update: Petronet LNG - ACCUMULATE - TP Rs.462 - Kotak
Company Update: Mirza International - REDUCE - TP Rs.161 - Kotak
Fiem Industries - BUY - TP Rs.1,254 - Kotak
Insurance: ICICI Prudential Life boosts industry growth - Kotak
Tejas Networks - A destination for high speed technology: Angel Broking
Hindalo Industries - Result Update - Strong show becoming a routine, maintain Buy - Centrum
Star Cement - Result Update - Profitability rebounds on better pricing, cost reduction - Centrum
FIEM Industries - Result Update - Negatives priced in, Well poised to gain in the long term - Centrum
Birla Corporation - Strong Q4 FY17; acquisition reporting strong numbers; Buy - Anand Rathi
Escorts Ltd - Ready for next leg - PhillipCapital
Earnings Update - Talwalkars Better Value Fitness (TBVF IN) - Results on expected line - CSEC Research
Result Update: Adani Port and Special Economic Zone (APZ) - BUY - TP Rs.425 - Kotak
Telecom: Two quarters of Jio - assessing the impact - Kotak
Earnings Update - Balkrishna Industries (BIL IN) - Strong volume growth continues - CSEC Research
Earnings Update - Kaveri Seeds Ltd(KSCL IN) - Muted performance - CSEC Research
Earnings Update - TTK Prestige (TTKPT IN) - Results in-line with expectation - CSEC Research
Earnings Update - Berger Paints (BRGR IN) - Results in-line with expectation - CSEC Research
Mayur Uniquoters - Footwear segment dragged performance; Maintain Hold - Awanish Chandra and Vikas Rajpal - Centrum
Ramco Cements - On solid footing; reiterate Buy - Rajesh Kumar Ravi and Vinay Menon - Centrum
Cadila gets US FDA approval for Mesalamine tablets: Angel Broking
Consumer Products: 4QFY17 review: better, but not quite there yet - Kotak
Earnings Update - MAHINDRA & MAHINDRA (MM IN) - Healthy performance led by FES - CSEC Research
Earnings Update -ITC (ITC IN) - Decent performance - CSEC Research
Earnings Update - Heidelberg Cements (HEIM IN) - Strong volumes; drive the earnings growth - CSEC Research


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2017