Mixed bag of Q3FY13 earnings for Indian cement producers

Mixed bag of Q3FY13 earnings for Indian cement producers
Published: 10 January 2013


A weakness in cement prices and softening demand in the region is expected to hit Q3FY13 earnings of some of India’s cement producers. Only ACC and Ambuja are forecast to record a YoY earnings growth, says research house Jefferies. Grasim, ICEM and UltraTech are predicted to see more modest earnings.

Ambuja should benefit from a 1.2 per cent YoY rise to 5.8Mt in cement and clinker volumes. Average realisation is anticipated to improve nine per cent YoY, largely cancelling out the two per cent QoQ decline and supporting a 10 per cent YoY revenue growth. The cement producer can also look forward to a strong EBITDA growth of 20 per cent.

ACC volumes are expected to increase 2.5 per cent to 6.1Mt with average realising improving five per cent YoY but fall three per cent QoQ. This would result in a revenue expansion of seven per cent when compared with the same period the previous year. EBITDA growth is forecast to accelerate to 14 per cent as higher cement prices improve operating leverage. 

For UltraTech, the results are forecast to be more muted with volumes to grow a modest one per cent to 10.2Mt with average realisation advancing eight per cent YoY. Despite a QoQ three per cent decline, this would still lead to a nine per cent revenue growth YoY. Higher freight expenses would dampen YoY EBITDA growth to six per cent.

Higher demand in Tamil Nadu and Karnataka is to push up sales volumes by four per cent for India Cements but realisation is predicted to remain modest at two per cent YoY after seeing a two per cent decline QoQ. While the company is envisaged to post a seven per cent revenue growth, higher power, fuel and freight costs should impact on EBITDA, which is forecast to record a 16 per cent YoY fall.

Finally, Grasim’s overall results are influenced by its (viscose staple fibre) VSF segment performance. VSF volumes are believed to remain flat with realisation on the downward slope as it records variations of minus five per cent YoY and minus four per cent QoQ. Standalone revenue is forecast to drop by four per cent YoY.