Latest News


Keyword Search

RegionB

Asia / Oceania

Cement companies to benefit from peak construction season & strong demand

Mar, 28 2012


(India)  --  Leading cement companies have stepped up dispatches in view of the peak construction season, which is under way, and strong demand. Also, firms such as ACC and Ambuja Cements, which had expanded their capacity during the last calendar year, are reporting strong output growth now.

The combined cement dispatches of leading producers - Holcim-controlled ACC and Ambuja Cements, and Aditya Birla group's UltraTech - grew 8% year-on-year to 7.7 million tonnes in February, compared with 5.4% during April to January, FY12.

The combined capacity of ACC, Ambuja Cements and UltraTech stood at nearly 108 million tonnes at the end of the December 2011 quarter. The Indian cement industry's total capacity is expected to top 326 million tonnes at the end of FY12, say reports.

On an all-India basis, total cement dispatches grew 9.7% Y-o-Y in February and 6.5% during the April-to-February period of the current fiscal, according to brokerage reports. Increased cement output during February has also pushed up industry utilisation levels to 81%, higher on a Y-o-Y basis, say analysts.

The Union Budget's focus on developing infrastructure and on affordable and rural housing should provide a boost to cement demand over the next few quarters.

However, the new excise duty structure is estimated to put an additional burden of nearly 3 per cement bag on companies, say analysts, but this could be partially offset by the removal of basic customs duty on coal. This is because the industry meets nearly one-fourth of its coal requirements from overseas sources.

Cement companies are expected to review their prices shortly, to protect their operating margins. The new rail freight rates announced in the first week of March would lead to a nearly 20% rise in cost for cement companies, say analysts.

Cement prices have already shown an uptrend (excluding the impact of the measures announced in Union budget). For instance, in Mumbai, prices are at 320 per bag, a rise of 35 per bag in this calendar year.

Investors, however, remain optimistic on the growth prospects of this sector, with ACC, Ambuja Cements and UltraTech Cement trading not too far from their recent 52-week highs.

ACC trades at a consolidated P/E of nearly 19.1 times on a trailing four-quarter basis and appears expensive

Source:

Bookmark and Share
Comments
0 Comment(s)
Add Your Comments


Weyerhaeuser railroad expansion to speed sand train loading

Source Energy Services is constructing a new rail siding east of its frac sand drying and loading site in Weyerhaeuser, Wisconsin. More

Rogers Group files application for 524-acre site

Rogers Group has filed and application for 524-acre site a mile north of Americus, Indiana. More

Advertise Here