ACC And Ambuja Cement Post Good Dispatch Numbers For March 2012
DSIJ Intelligence / 03 Apr 2012
ACC and Ambuja Cement, the largest cement producing companies in India, have reported the production and dispatch numbers for March 2012 wherein both have posted decent uptick in the dispatches that have grown by 7.34 and 12.4 per cent on a YoY basis respectively.
ACC and Ambuja Cement, the largest cement producing companies in India, have reported the production and dispatch numbers for March 2012 wherein both have posted decent uptick in the dispatches that have grown by 7.34 and 12.4 per cent on a YoY basis respectively. As mentioned in our earlier updates, the demand for cement has been in a revival mode and has been growing continuously over the last three months. This can also be realised from the dispatch numbers reported by the company in this quarter. For the March quarter the dispatches for both the companies grew by 7.87 and 9.9 per cent on a YoY basis respectively.
|
| Dispatches | |||||
|---|---|---|---|---|---|---|
|
| ACC | Ambuja | ||||
| Months | 2011 | 2012 | YoY | 2011 | 2012 | YoY |
| Jan | 2.05 | 2.23 | 8.8 | 1.84 | 1.92 | 4.2 |
| Feb | 2.00 | 2.15 | 7.5 | 1.77 | 2.00 | 13.0 |
| Mar | 2.18 | 2.34 | 7.3 | 1.93 | 2.17 | 12.4 |
| Total | 6.23 | 6.72 | 7.9 | 5.54 | 6.09 | 9.9 |
The jump in the sales volumes is mainly on account of the revival seen in the construction and infrastructure activity in the December and March 2011-12 quarters. With the RBI having cut the CRR twice, this has infused some liquidity into the system and has helped the interest rate cycle to get peaked out. We may not see any other rate hike going forward. With this rate cut the infrastructure and construction companies will get some relief in raising funds for their new and ongoing projects. Also, cement is a cyclical business and generally the second half of the financial year remains better than the first half. We expect the cement companies to perform strongly in the March 2012 quarter.
|
| ACC | Ambuja | ||||
|---|---|---|---|---|---|---|
| Particulars | Dec Qtr 2011 | Mar Qtr 2012 | QoQ | Dec Qtr 2011 | Mar Qtr 2012 | QoQ |
| Realisation | 4,271 | 4,671 | 9.4 | 4,236 | 4,636 | 9.4 |
| Sales Volume | 5.89 | 6.72 | 14.1 | 5.54 | 6.09 | 9.9 |
| Total Sales | 2,515.6 | 3,138.9 | 24.8 | 2,346.7 | 2,823.3 | 20.3 |
The year 2011 for cement companies has remained quiet challenging. Lower demand, high input cost, high interest regime, tighter liquidity situation and slower economic growth has dampened the performance of the companies. For instance, the dispatch for Ambuja Cement from January –December 2011 has grown merely by 4.8 per cent on a YoY basis. For Ultra Tech the dispatch in the last one year has grown by just 2.3 per cent on a YoY basis.
However, the scenario now looks more favourable for cement players as can be observed from the dispatch numbers of ACC and Ambuja Cement during the March quarter. Both these companies have not yet announced the date of the result for the March quarter but we believe that they will reflect decent growth in their revenues and margins. As per our calculations, both the companies will see topline growth of 25 and 20 per cent on a QoQ basis respectively. This will be on account of a hike in the cement prices implemented twice during the quarter by an average Rs 20-25 which will lead to higher realisation coupled with the increase in sales volume due to a pick-up in demand.
Also, the import duty cut on coal announced in the budget will help those cement companies which consume imported coal. And with the rupee appreciating from Rs 53 to Rs 50 against the dollar during the quarter, this will lead to cheaper coal imports. However, the recent hike in freight rates by 20 per cent will eat away some of the benefits derived from the price hike.
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