ACC reports good Cement dispatch numbers for Feb 2012
Chandrakant / 06 Mar 2012
ACC has announced its dispatch numbers for February 2012 wherein, after witnessing a decent uptick of 8.78 per cent in demand for the month of January, the numbers have grown by a noteworthy 7.5 per cent on a YoY basis to 2.15 million tonnes
ACC has announced its dispatch numbers for February 2012 wherein, after witnessing a decent uptick of 8.78 per cent in demand for the month of January, the numbers have grown by a noteworthy 7.5 per cent on a YoY basis to 2.15 million tonnes. Meanwhile, production has grown by 8.63 per cent on a YoY basis. The growth in dispatch indicates that there has been a continuing strong revival in demand over the last two months. This is also reflected from February’s dispatch numbers reported by the other major cement players, as for example, Ambuja Cement, which has grown by 13 per cent on a YoY basis.
| Dispatch In Last Three Quarters ( Quantity In Million Tonnes) | |||
|---|---|---|---|
|
| 2010 | 2011 | YoY |
| Oct | 1.92 | 1.97 | 2.5 |
| Nov | 1.74 | 1.83 | 4.9 |
| Dec | 1.92 | 2.09 | 8.9 |
| Total (Oct – Dec) | 5.58 | 5.89 | 5.6 |
| Dispatch In 2012 | |||
| Period | 2011 | 2012 | YoY |
| Jan | 2.05 | 2.23 | 8.78 |
| Feb | 2.00 | 2.15 | 7.50 |
However, on a MoM basis the dispatches have declined by 4 per cent and this is due to the higher base in the month of January mainly due to strong revival that was seen post-monsoon in the construction and infrastructure activity. Also, cement makes for a cyclical business and generally the second half of the financial year remains better than the first one. We expect further improvement in the coming months also.
On the brighter side is the revival of demand witnessed in the last five months. Also, if we look at the third quarter GDP numbers, the construction sector grew by 7.2 per cent vis-a-vis 4.2 per cent in the September quarter of 2011. With the RBI having cut the CRR by 50 bps, the indication is that the interest rate cycle has peaked out and we may not see any other rate hike going forward. In fact, by reducing the CRR the RBI has infused liquidity in the system to boost expenditure in the economy. Moreover, with the economy slowing down to 6.1 per cent in the third quarter of 2011 – the lowest in last two years – the government will use various liquidity measures to kick-start the economy.
We believe that the cement companies in the current quarter will see decent growth in their volumes. Moreover, they will witness good growth in their revenues on the strength of a pick-up in demand and the increase in cement prices which were carried out to offset the high coal prices and freight charges. Therefore, with both the aspects looking in favour of the sector we expect cement companies to do well in the coming months too.
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