Oct 8, 2002|
Cement: 'Voluminous' growth
Cement companies are witnessing a boom, atleast on the volumes front. Dispatches of major cement companies have risen considerably on account of a healthy demand from the housing as well as highway projects. On an average, dispatches of the four major cement companies in the country have gone up by 24% in 2QFY03 on a YoY basis with Gujarat Ambuja leading the pack.
July was a significant contributor to this growth. A poor monsoon at the beginning of the season led to good volumes in during this month. Volumes tapered off in the next two months, as rain gods smiled again. Nearly 60% of cement demand comes from the housing sector and not surprisingly, 2QFY03 trends in consumption indicate that the demand from the housing sector has been robust. However, the ongoing highway projects have been the main catalyst for this spurt in cement demand.
Gujarat Ambuja has once gain recorded impressive dispatch growth figures in the second quarter. While it may be noted that these growth numbers are at a relatively smaller base as compared to the other cement majors, nevertheless, they are still impressive. Compared to the last quarter, the top 4 companies have performed better despite the onset of monsoons (see table). The dispatch numbers are very impressive considering that the average growth rate in 1QFY03 (April - June) was just 12%.
In the second half of FY03, dispatch growth is likely to be healthy but may not be as robust as seen in the second quarter. The cement industry's long term demand drivers like infrastructure projects and housing are likely to keep dispatches robust. Also, with no major capacity additions seen in the next 2-3 years, prices are likely to firm up towards the end of FY03.
In that sense, the cement sector seems a good long term investment avenue, as the latent potential of the Indian cement industry itself is huge. Per capita cement consumption in India is just 100 Kgs compared to 300 Kgs in Western Europe and 280 Kgs in US. Even Asian neighbours like China (420 Kg) and Japan (600 Kgs) have much higher consumption rates. Having said that, investors will be better off evaluating prospective companies based on their focus towards the business and their current standing in the market i.e. size and reach etc.
More Views on News
Aug 11, 2017
UltraTech Cement completed the acquisition of cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL) during the quarter ended June 2017.
Aug 11, 2017
While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.
Jul 20, 2017
Expanded capacity helped ACC strengthen its market presence in eastern region during the quarter ended June 2017.
May 18, 2017
Cement demand was weak because of subdued housing demand, volatile cement prices, and rising fuel costs.
May 8, 2017
Stock price jumps up on Ambuja-ACC merger talks...
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407