Cement Sector Update - North & Central see first seasonal uptick - Emkay

- All India prices at Rs294/bag - 1.3% mom. Northern & Central regions see first post moonsoon seasonal price hike. However flattish price trends observed in western and eastern region.

- Southern averages still getting battered (-5% mom) led by steep decline in Andhra market due a price war triggered by ramp up by new capacities (Jaypee and JSW).

- Though cement volumes growth remains subdued, Price movement in 2Q remains favorable for cement earnings with shorter period of decline leading to 2QFY13 avg prices being up 1.4% QoQ.

- See large yoy realisation improvement (Except South) as 2QFY12 had seen a sharp 7% decline qoq. Further cost pressure to remain under control as truck freight hikes get negated by 9% yoy decline in international coal prices.

- Prefer ACC as steep valuations leave little room for further out-performance for Ambuja & Ultratech. Remain positive on Grasim, Shree Cements and Madras Cements (strong volume growth and improving cost structure).

Source : Equity Bulls

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