Thursday, September 3, 2009

[Investors Please Listen] Cement majors post impressive growth in August 09 dispatch numbers

Cement companies reported impressive dispatch growth for August. Shree Cement and Jaypee posted stellar yoy dispatch growth of 29.7% and 43% driven hectic construction activity in Delhi and Northern UP. Capacity addition of these two companies helped them capitalise on growth momentum. 

AV Birla Group companies Grasim and Ultratech witnessed high dispatch growth on the back of capacity additions. Grasim Registered growth of 43.1% yoy on account of capacity additions and low base (last August couple of cement mills for Grasim where shutdown. Ultratech posted total dispatches growth of 8.1% (cement dispatches up 21.2%, Clinker volumes down 40.8%). However we note that the month of August Ultratech has registered total Dispatches of 1.5 mt as compared to 1.2 mt in July 2009.  Ultratech in July had undertaken periodic maintenance for 4-5 of its cement mills. 

Ambuja Cement registered dispatch growth of 15.3% for the month while ACC registered growth of mere 7.1% yoy.

Cumulatively the top 6 producers have registered growth of 20%, regaining momentum lost in July (top 6 players growth at 15%).

We have been positive on the sector on the back of strong dispatch growth, uptick in prices and delay in capacity addition. We remain positive on the sector with ACC, Ultratech and Shree as our top pick in the sector.


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