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Jul 26, 2012, 12.20 PM IST
Emkay Global Financial Services has come out with its report on cement sector. The research firm prefers ACC & Shree Cement and retains Ultratech Cement from the space.
Emkay Global Financial Services has come out with its report on cement sector. The research firm prefers ACC & Shree Cements and retains Ultratech Cement from the space.
The top 5 producers have posted a growth of 10.2% in the month of June. The industry growth normally trends at 80-90% of the top 5 producer’s dispatch growth trend ( exception in the month of April-12) thereby pointing towards estimates of 9-9.5% yoy dispatch growth for industry in the month of June-12.
Outlook: The period of April May witnessed prices declining which was an unusual trend . However June July period has been a recovery which has been mainly due to shortage in supply and a delayed monsoon which has given producers a extra window to push up prices. This recent hike will undoubtedly become a cushion for the seasonal fall in cement prices with the pick up in monsoon and is likely to positively surprise the street on the realization front . This fact was clearly visible with Ultratech’s result, the largest pan India cement producer and has led to upgrades in the estimates for FY13 and FY14. The market doesn’t seem to succumb to the pressure of the recent penalties levied by the Competition Commission of India and the delayed monsoons have provided producers with another window to cushion themselves from the seasonal fall which is likely to follow with the pick up in monsoons in the coming few weeks. Net net we see this as a positive trigger for cement producers with key costs seeming to have peeked out while high realizations resulting in upwards revision for companies like Ultratech. Prefer ACC & Shree Cement. Retain HOLD on Ultratech (prefer Grasim ). Maintain REDUCE on Ambuja & India Cements .
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Tags: Emkay Global Financial Services, cement sector, ACC, Shree Cement, Ultratech Cement, Grasim, Ambuja, India Cement
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