Ambuja Cements’ reported higher cement dispatch for Feb 2012
DSIJ Intelligence / 05 Mar 2012
Ambuja Cements, the largest cement producing company in India, has reported its production and dispatch numbers for Feb 2012. The company has reported a strong uptick in the dispatches, which have grown by 13% on a YoY basis to 2 MT
Ambuja Cements, the largest cement producing company in India, has reported its production and dispatch numbers for Feb 2012. The company has reported a strong uptick in the dispatches, which have grown by 13% on a YoY basis to 2 MT. The growth in dispatches indicates that there has been a strong revival in demand during the month. This can also be seen from the dispatch numbers as reported by the company over the last few months.
| Dispatches (In Mn tonnes) | |||||
|---|---|---|---|---|---|
| Feb-11 | Feb-12 | YoY % | Jan-12 | MoM% |
|
| 1.77 | 2.00 | 13 | 1.91 | 4.18 |
|
Moreover, if we look at the MoM performance, the dispatches for Ambuja Cements have gone up by 4.18%. The jump in the sales volumes is mainly on account of the revival seen in construction and infrastructure activity in the Dec 2011 quarter. Also, if we look at the Q3 GDP numbers, the construction sector has grown by 7.2% versus the growth of 4.2% in the Sept 2011 quarter.
With the RBI having cut the CRR by 50 bps, we get an indication that the interest rate cycle has peaked out and we may not see any more rate hikes going forward. In fact, by reducing the CRR, the RBI has infused liquidity in the system to boost the expenditure in the economy. Moreover, with the economy slowing down to 6.1% in Q3 of 2011, the lowest in the last two years, the govt. will use various liquidity measures to kickstart the economy.
With this, infrastructure and construction companies will get some relief with regard to funds for their new and ongoing projects. Also consider that cement is a cyclical business, and the second half of the financial year generally remains better than the first half. We expect a further improvement in the coming months.
As of now, the scenario looks fairly conducive for these players. We, at DSIJ, believe that the cement companies will witness a decent uptick in sales volume in the coming months too.
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