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10 Jul 2019
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Jobs Workplace and Corp Go...
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HDFC Securities
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Top Picks
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Top picks: We remain bullish on UltraTech, ACC and Dalmia Bharat among the cement majors. In mid-caps, we prefer JK Cement, Orient Cement, Star Cement and Deccan Cement. Demand growth takes a pause: After six consecutive quarters of double digit growth, cement demand growth flattened in 1QFY20E (on high base of 16% YoY). Companies attribute this to slowdown in construction activities during the elections. Labour and water shortage also added to demand woes. We understand companies effort to rationalise cement prices upwards also pulled down demand temporarily. We estimate the aggregate sales volume of 11 cement companies under our active coverage to decline 1% YoY (inline industry trends) in 1QFY20. We estimate 6% volume growth for UltraTech (mainly aided by Binani acquisitions), while we estimate 13% volume decline for Shree Cement. For all others, we estimate the growth to range between -7% and +2% YoY.
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