Ambuja Cements records decent production and dispatch growth for Dec 2011

Chandrakant / 05 Jan 2012

Ambuja Cements has released its Dec 2011 production and dispatch figures. On a YoY basis, there has been a 6% growth in dispatches to 1.93 MT and a 7% growth in production to 1.91 MT.

Ambuja Cements, which is among the cost efficient cement companies in India, has released its Dec 2011 production and dispatch figures. In Nov 2011, the dispatches grew by 30%, which we attributed to a low base effect and not to a strong revival of cement demand in the country. This is also evident from the dispatch numbers released by the company in Dec 2011. The company has witnessed a modest growth in dispatches, which has grown by 6% on a YoY basis to 1.93 MT. In the same month, production has grown by 7% on a YoY basis to 1.91 MT.

Dispatch In The Last 3 Quarters

 

2010

2011

YoY

Jan-Mar

5.35

5.65

5.6

April-June

5.5

5.32

-3.3

July-Sep

4.46

4.75

6.5

Oct-Dec

4.98

5.54

11.2

Total (Jan-Dec)

20.3

21.3

4.8

Dispatch Numbers For Q4 CY11

Oct

1.75

1.78

1.7

Nov

1.41

1.83

30.0

Dec

1.82

1.93 

6.0 

Total (Oct-Dec)

4.98

 5.54

11.2 



The MoM performance of the company has remained quite good regardless of the concerns prevailing in the economy. The dispatches during the month have grown by 5.5% on a MoM basis to 1.93 MT. This is a positive sign of a slow recovery in sales for the coming months.

2011 has remained a challenging year for cement companies. Lower demand and higher input costs have dampened the performance of these companies in the last one year. For instance, the dispatches for Ambuja Cements from Jan-Dec 2011 have grown by a mere 4.8% on a YoY basis. However, due to the low base effect, the Dec 2011 quarter has remained the best one in terms of dispatches, with the highest growth of 11% in the whole year.

The cement business is cyclical, and the 2nd half of the financial year typically remains better than the 1st half. Therefore, we believe that the company will see an uptick in dispatches in the coming months. It has been seen that the demand has a propensity to get better post the monsoons, and continues to remain higher in the 2nd half of the year due to a pick up in infrastructure and construction activity.

Ambuja Cements has not yet declared the date of result announcement for the Dec 2011 quarter. We believe that the company will see decent growth in its revenues in the upcoming results, largely for 2 reasons. The first reason is that it has increased the cement prices in the Dec 2011 quarter, which will lead to higher realisations. Secondly, a higher dispatch due to the low base effect will lead to decent revenues. However, pressure on the margins may persist due to high freight charges and interest expenses.

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