Cement - Higher profitability to sustain, given increasing capex cost - Motilal Oswal

Top-3 maintain 8-9% volume growth guidance; seasonal price correction below normal

We hosted ACC, Ambuja Cements and Grasim/Ultratech at the Motilal Oswal 8th Annual Global Investor Conference. Mr Kuldeep Kaura, CEO & MD of ACC, presented at the CEO Track.

Highlights:

- Volumes are likely to grow 8-9% in FY13, driven by individual housing and expected infrastructure push. Seasonal price correction has been sub-normal till August due to delayed monsoon.

- Capacity addition should slow down to ~60mt over FY13-15. Increase in capex cost necessitates sustenance of higher profitability; downside risks are limited.

- The costs of power, fuel and freight, which have been rising, are likely to stabilize at elevated levels. The focus would remain on enhancing operating efficiencies and maintaining margins.

- We prefer Ambuja and Grasim/Ultratech among large-caps and Shree Cement among mid-caps.

Source : Equity Bulls

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