India cement producers expect improved December quarter

India cement producers expect improved December quarter
Published: 13 January 2010

India’s top four cement companies – ACC, Ambuja Cements, Grasim and UltraTech Cement – are expected to report, on an aggregate basis, a 36.4% YoY growth in net profit in the December ‘09 quarter, while net sales of these players are forecast to rise by 5.1% YoY, according to estimates of ETIG and eight broking firms.

Besides, going by various estimates, the cement industry  is anticipated to show among the fastest growth, in terms of rise in net profit in the third quarter of FY10.

These four players reported a 5.8% YoY growth in their despatches to 19Mt in the December ‘09 quarter compared with a 12.1% YoY rise during the second quarter of FY10 which is the monsoon season. The subdued growth in despatches during the third quarter was due to a marginal negative growth in ACC dispatches on a YoY basis, while Grasim and UltraTech showed a strong double-digit growth. In contrast, during the September ‘09 quarter, the cement dispatch growth was very strong, given the delay in monsoon in several parts of the country, coupled with a low-base effect in the previous year.

However, on the demand side, during the December ‘09 quarter, the offtake for cement has been strong from infrastructure and housing projects, especially in northern, eastern and central regions. But in the southern regions the operating environment has been tough. That’s because in southern states especially Andhra Pradesh, cement players have grappled with signs of a slowdown in implementation of government-funded infrastructure projects, coupled with additional capacities coming on-stream.