Cement Sector Update By JM Financial
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TABLE OF CONTENTS
INDUSTRY VALUATIONS
India Cement Industry peers are trading at 9.4x EV/E and USD 121/t on FY23E
PRICE TRENDS
All India Cement prices in Sep-21 changed 0% MoM, -5% QoQ, 2% YoY
VOLUME TRENDS
Industry production in Aug’21 was 28.4mnT; -4.3% MoM, 36.3% YoY
COST COMPONENT TRENDS
Petcoke/Coal/Diesel prices have changed by 23%/53%/7% QoQ and 92%/107%/20% YoY
PER TONNE IMPACT
Expect Power costs to increase by INR 175/t and Freight cost by INR 27/t QoQ
QUARTERLY MATRIX
Volumes are up 44% YoY; Realisation are up 6.7% QoQ; EBITDA/t is up 4.9% YoY in 1Q
DEMAND TRENDS
We expect 10-12% growth in cement volumes in FY22E
TOP PICKS
We are positive on Ultratech and Dalmia Bharat
NEWS HIGHLIGHTS FROM THE WEEK CLICK HERE FOR LAST REPORT
* Chhattisgarh Transport association goes on strike: They are on strike since 19th Sep’21 demanding rise in freight rates to offset the impact of diesel prices. This has led to reduced and in some cases stoppage of cement despatches from the plants in Chhattisgarh.
* South may see hit in production: SICMA: Following an unprecedented rise in the cost of imported coal/pet coke and shortage of vessels, cement production in the South might take a hit. It is estimated that the resultant increase in the production cost can be INR60 per bag.
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