Cement: One more strong quarter in offing


Consensus earnings are but once more prone to be upgraded given higher than anticipated volumes/costs.

After posting >40% y-o-y Ebitda progress in every of the previous two quarters, cement corporations in our protection universe are prone to repeat the efficiency in Q4FY21 too. This could be led by 24% y-o-y quantity progress with Ebitda/te rising 14% y-o-y (Rs 150/te) to Rs 1,218/te. We anticipate realisations to rise 0.6% q-o-q (`30/te) and 4% y-o-y (Rs 190/te). Equally, whole price/te could stay broadly flat q-o-q, however up 1% y-o-y (Rs 40/te).

Key set off to observe: seasonal worth hikes in Apr’21 (already introduced Rs 15/bag) given peak development interval and necessitated by price escalations. Consensus earnings are but once more prone to be upgraded given higher than anticipated volumes/costs. SRCM & UTCEM stay our prime picks. We additionally like ACEM, JKCE and TRCL. Key dangers: decrease demand/costs, and any regulatory interventions.

Business volumes anticipated to develop 20% y-o-y/15% q-o-q throughout Q4FY21e to 105mnte aided by the low base of Mar’20, with pan-India utilisation at ~85%. Adjusted for the bottom, trade progress is anticipated at 6-7% y-o-y. JKCE is prone to lead with >40% y-o-y quantity progress whereas UTCEM/DALBHARA/ACEM /JKLC might even see 24-30% y-o-y progress. ACC /SRCM/HEIM could report quantity progress of ~20% y-o-y and TRCL/ICEM might even see excessive single-digit y-o-y progress.

Common pan-India costs up 6% y-o-y throughout Q4FY21 led by 15% y-o-y rise in South and 10% y-o-y enhance in West. Costs in North and Central areas are up 2-3% y-o-y whereas these in East are broadly flat y-o-y. On a q-o-q foundation, common pan-India costs are doubtless up ~1% q-o-q led by 4% q-o-q enhance in East and a pair of% in West. Realisations enhance q-o-q is prone to be higher given increased (~3% q-o-q) worth will increase in non-trade phase, a part of non-trade volumes shifting to commerce phase, and higher market combine change.

Common Ebitda/te could rise 14% y-o-y (Rs 150/te) and 1% q-o-q to Rs 1,218/te for our protection universe. Total price/te could stay broadly flat q-o-q (up 1% y-o-y) as sharp ~Rs 150/te q-o-q enhance in variable prices is prone to be offset by higher working leverage, decrease upkeep prices, and value efficiencies. Ebitda progress could also be sturdy at ~70% y-o-y for TRCL and DALBHARA, and 40-50% y-o-y for UTCEM, JKCE, PRSMJ, and ORCMNT. Ebitda progress for ACEM, ACC and JKLC could are available in at ~30% y-o-y. SRCM and TRCL are prone to lead with Ebitda/te of >`1,500/te. With bettering VSF costs, standalone Ebitda for Grasim could greater than double y-o-y to `8 bn on a low base.

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