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Cement: Dec dispatches down by 3.2%

Prabhudas Lilladher | 10 Jan, 2011  | Follow Author | Add to my Favourites 
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Cement despatches down for the consecutive second month: Cement dispatches (ex. Chettinad Cement and My Home industries) for the month of December fell by 3.2% to 16.8 mn tonnes as per the number announced by Holcim group and CMA members (constitute ~97% of the aggregate dispatches). This comes back-to-back on the negative growth of 6% in November. Prabhudas Lilladher expects fall in the dispatches to settle in the range of 3-4%, given the exposure of remaining players to Southern markets.

Dispatches for the pure  South-based companies dipped by 22% for December. Prabhudas Lilladher expects region's demand to remain under pressure on the backdrop of political instability in AP and poor demand dynamics in other states.

Demand expected to improve in Northern and Central region: Prabhudas Lilladher expects demand in Northern and Central region to regain the momentum post mid-January on the back of suitable weather conditions, year-end buying and release of funds by State and Central Government. Cement consumption for Northern region declined by 2.7% in December, while in case of Central region, it grew by 6% for the month.

Outlook and Valuation: Prabhudas Lilladher continues to maintain Underweight on the sector, with the underlying expectation of weakness beyond street expectations on both the earnings level and duration of the cycle and de-rating in valuations, coupled with deteriorating earnings quality and unimpressive return ratios.

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About Prabhudas Lilladher

Prabhudas Lilladher has a nationwide distribution network, consisting of branches, franchisees and associates, providing a comprehensive gamut of financial services in the Institutional and Retail domain. Their services includes Equity, derivatives; margin funding, mutual funds, PMS, IPOs and online trading.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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