Ambuja Cement Posts Decent Dispatch Numbers
DSIJ Intelligence / 04 Oct 2012
Ambuja Cement, a Holcim Group company and the third-largest cement producing company in India, has announced its cement dispatch and production numbers for the month of September 2012. Despite the weak demand scenario due to monsoon the company has able to maintain a decent dispatch in the month of September 2012. The cement dispatch is up by 4.9 per cent on YoY basis to 1.55 million tonnes while production was up by 6 per cent on YoY basis to 1.55 million tonnes. And if we look at the overall dispatch numbers for the September 2012 quarter, there has been a marginal growth of 1 per cent on a YoY basis to 4.70 million tonnes.
| Dispatch In Last six Months ( Quantity In Million Tonnes) | ||||
|---|---|---|---|---|
| Months | 2011 | 2012 | YoY | MoM |
| April | 1.82 | 1.85 | 1.6 | -14 |
| May | 1.76 | 1.93 | 9.7 | 4.3 |
| June | 1.66 | 1.79 | 7.8 | -7.3 |
| June Qtr 2012 | 5.24 | 5.57 | 6.3 | |
| September Quarter 2012 | MoM | |||
| July | 1.68 | 1.69 | 0.6 | -5.6 |
| August | 1.49 | 1.45 | -2.7 | -14.2 |
| Sept | 1.48 | 1.554 | 5.0 | 7.17 |
| Sept Quarter 2012 | 4.65 | 4.694 | 0.9 | |
Cyclically, the September quarter remains a muted quarter for the cement industry, mainly because of the monsoon when infrastructure and construction activities are at their lowest levels. That is why we have seen a muted growth in the dispatches in the months of July and August.
Recently ACC too reported a decent uptick in the dispatches in the month of September grew by 4 per cent on YOY basis. Therefore with two major cement companies showing recover it is a good indication of the revival in the demand after reporting a decline in dispatch in the month of August.
Ambuja cement too there has been a recovery in the dispatches on a MoM basis which is up by 7 per cent.
Moreover, the decline in the cement price during the September quarter was lower than expected with decline of just 2 per cent - far below our expectations of 5-6 per cent. The pan-India cement prices stood at an average of Rs 265-270. Further, recently some of the cement companies with a reversal in demand and a hike in the diesel prices have raised the cement prices by Rs 5-6 per bag of 50 kgs. The hike in cement prices has caused a sentimental rally in the stocks over the last two weeks, pushing them higher by 10-15 per cent. Today Ambuja cement is up by 2.5 per cent to Rs 218 and has touched a fresh 52-week high.
For the September quarter we expect Ambuja Cement to post decent financial numbers mainly on the back of the lower than expected decline in the dispatches and better realisation during the quarter. A recovery in demand in the September month and lower than expected fall in the cement prices will result in decent growth on the topline of the company. However, one can see some margin pressure too because of the high freight and power & fuel cost. Also, in view of the cyclical business of cement, generally the first half of the financial year remains weak and despite this cement companies will post decent numbers during the quarter.
Going forward we believe that most of the cement companies have done well on the bourses and we believe this will continue in the coming month mainly on the back of the renewed demand from the rural areas and government’s effort to boost infrastructure spending and activity in the country. Further, with the monsoon reaching its peak levels, one can start expecting a reversal in the cement prices too in the coming months.
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