Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Posted On: 2020-11-27 01:09:00 (Time Zone: Arizona, USA)

Our channel checks suggest industry demand likely grew in mid-single digit YoY during Oct-Nov'20 led by >10% YoY growth in North, Central and East regions, while South still continues to decline YoY with West region may be broadly flat YoY. Unlike previous years, which usually witnessed 2-4% QoQ price decline in Q3, average prices are resilient and broadly trending flat QoQ in Q3FY21 till date. On a YoY basis, average pan-India prices are up 7% YoY in Nov'20 led by 18% YoY rise in South and 4-8% YoY increase in North, Central and West regions with almost flat prices YoY in East. Consensus FY21E / FY22E EBITDA has been upgraded by 25%/15% over the past five months and we see an upside risk to these estimates. SRCM and UTCEM remain our top picks. We also like ACEM, JKCE and TRCL.

- Industry volumes expected to grow in mid-single digit YoY during Oct-Nov'20 (our estimate) with pan-India utilisation at ~73%. Given the shift in festive holidays to Nov'20 this year, combining Oct-Nov volumes together will be better for more meaningful comparison. While rural and semi-urban housing demand continues to drive growth, pick-up in government-led infrastructure and non-trade demand likely aided growth. Pent-up urban demand (mostly non-trade), especially in South and West, may improve going ahead with gradual return of migrant workers. We continue to factor in low single digit decline in industry volumes for FY21E since Apr'20 vs consensus view of at least low double-digit decline.

- Average pan-India prices up 7% YoY during Nov'20 led by ~18% YoY increase in South. Prices are up 4-8% YoY in North, Central and West and almost flat YoY in East during Nov'20. Companies may partially switch to coal owing to sharp increase in pet coke prices, which may restrict power and fuel costs/te increase to 10% and overall costs/te are still likely to be broadly flat YoY in H2FY21E. Accordingly, companies may report strong 30-35% YoY EBITDA growth in H2FY21E led by 10%/5% YoY volume/realisation growth, respectively.

- Stocks rally backed by strong earnings growth/visibility; sector outperformance to continue: Average EBITDA/te for the sector grew by 30% in FY20 which further increased by 20% in H1FY21 led by firm prices and lower costs, despite weak volumes. With improving volume / prices, investors are likely to get more convinced about sustainability of these EBITDA/te for the sector (except South region).

- We prefer companies with higher volume growth visibility and higher exposure to North and Central regions as demand improvement amidst delay in clinker additions (by UTCEM in Central and ACEM in North) would likely lead to >90% utilisation in these regions during H1CY21 and may lead to strong prices /margins.

Source: Equity Bulls

Click here to send ur comments or to

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., 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. 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:

Maintain ADD on Symphony - Domestic in line; RoW improving - HDFC Securities

Maintain ADD on Multi Commodity Exchange - Taking a pause; recovery awaited - HDFC Securities

Maintain ADD on DCB Bank - Provisioning cushion emerges ahead of expectations - HDFC Securities

Maintain BUY on Birla Corporation - Margin buoyancy continues - HDFC Securities

ADD on SRF - Returning to normalcy - HDFC Securities

HDFC Securities - Maintain BUY on UltraTech Cement - Solid show!

Ajanta Pharma (Initiating Coverage) - Gearing for the next leap - HDFC Securities

BUY on SBI Life Insurance - Growth returns - HDFC Securities

Kajaria Ceramics (Initiating Coverage) - Galloping ahead - HDFC Securities

UltraTech Q3 FY21 - YES Securities

HDFC Life Q3 FY21 - YES Securities

SBI Life - Q3 FY21 - YES Securities

Aavas Financiers Q3 FY21 - Conference Call Takeaways - YES Securities

Birla Corp Q3 FY21 - YES Securities

ADD on Reliance Industries - Sailed through the tough times! - HDFC Securities

Grasim Industries - Aspiring for strong no.2 position in paints - ICICI Securities

Kewal Kiran Clothing - Better execution with flat EBITDA YoY - ICICI Securities

Mphasis - DXC will continue to be key in the near term - ICICI Securities

HDFC Securities: Indian Chemical Sector (Sector Update) - Steering well through the pandemic!

UltraTech Cement - Earnings upgrade continues; ripe for rerating - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - Q3FY21 - ICICI Securities

SBI Life Insurance Company - Strong performance, attractive valuations (<2 FY23 P/EV) - ICICI Securities

Biocon Limited - Slow recovery in biosimilars - ICICI Securities

HDFC Life Insurance Company - Not only - but also - about protection - ICICI Securities

DCB Bank - Gradually approaching normalcy - ICICI Securities

Aurobindo Pharma - Approval for 3 products under PLI Scheme - ICICI Securities

Yes Bank - Aggravating asset quality fears outweigh operating performance turnaround - ICICI Securities

JSW Steel - Peak margins expected in Q4FY21 - ICICI Securities

Aavas Financiers - Quality intact; premium to sustain - ICICI Securities

Supreme Industries - Q3FY21 First Cut - ICICI Direct

Polycab India Ltd - Q3FY21 First Cut - ICICI Direct

DCB Bank - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Symphony Ltd. - ICICI Direct

Ultratech Cement - Q3FY21 First Cut - ICICI Direct

Oberoi Realty - Q3FY21 First Cut - ICICI Direct

HDFC Life Insurance - Q3FY21 First Cut - ICICI Direct

SRF Limited - Chemical biz's good performance may continue - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - ICICI Securities

Q3FY21 Company update - Zensar Technologies - ICICI Direct

JSW Steel - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Biocon Ltd - ICICI Direct

Symphony Ltd - Q3FY21 First Cut - ICICI Direct

Crompton Greaves Consumer Electricals - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Bajaj Finserv - ICICI Direct

Q3FY21 Result update - Bajaj Auto - ICICI Direct

Quant Pick - Hero MotoCorp - ICICI Direct

Company update - Cyient Ltd - Q3FY21 - ICICI Direct

Covid Recovery Pulse - Auto retail taper off in new year 2021 - ICICI Direct

Q3FY21 Result update - Asian Paints - ICICI Direct

Company update - Mphasis Ltd - Q3FY21 - ICICI Direct

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

disclaimer copyright © 2005 - 2020