Construction Materials share price target

Our channel check suggests, average cement price at an all India level is up 4% MoM in Mar-2021. Region wise, price increase is seen in North/South/West at 3% MoM, Central is at +4% MoM and East is up +5% MoM. Cost has marginally moved down, in Mar-21 imported coal price (adjusted for exchange rate) is down 4% MoM. In FY21 so far, average imported coal price is down 9% vs avg of FY20. But we need to watch for the trend as coal cost is moving up. Average price of imported coal in Q4FY21 is up 47% vs Q3FY21. On demand front, all India cement production in Jan-21 has decreased by 6% YoY vs 10% YoY decline in Dec-20....

Central Rs5/bag except central part w here (Rs/bag) prices remained unchanged. Prices in MP increased by Rs5/bag MoM. Region's...

as well as new real estate sales and market share gains uilding material companies like tiles, PVC pipes from unorganized players, especially in the tile and plastic & plywood & laminates are in the limelight pipes segment. The Indian Tiles and Ceramic industry has as the demand for real estate has reboundundergone a challenging phase recently (FY16-19). Noneed strongly after a long period of lull. The theless, it was also the period during which the inorganic outbreak of COVID-19 in the beginning of 2020 which...

Street is doubtful on sector's ability to increase prices post CCI raids. While, we remain confident that prices would see meaningful increase to help maintain Q3FY21 margins given the peak period of activity and steep surge in fuel cost. We...

Average diesel prices are up ~10% YoY, which will lead to a rise in freight cost by | 55/tonne. Also, petcoke prices inched up 26% QoQ (up 35% YoY). However, players switching to coal would help restrict its impact to ~1214%. This would lead to another cost impact of | 90-100/tonne during the quarter. On the other hand, we expect cost rationalisation drive initiated during H1 to keep overall cost of production under check. Also, cement prices despite QoQ correction are up 5.1% YoY. This is expected to lead to...

Prefer Ambuja (ACEM) over ACC due to upcoming expansion in North Board of Directors of ACC and ACEM approved renewal of TKH fees for next couple of years effective 1st January, 2021 at existing rate of 1% of net sales. Both the stocks have been under pressure for last one month due to overhang on the status of fees. Status quo on fees would help to retain investor sentiments as any increase in fees would have further escalated the below average performance on margins and volume growth. We maintain BUY on ACC and ACEM with revised TP of Rs1,770 and Rs280 respectively based on...

Prefer Ambuja (ACEM) over ACC due to upcoming expansion in North Board of Directors of ACC and ACEM approved renewal of TKH fees for next couple of years effective 1st January, 2021 at existing rate of 1% of net sales. Both the stocks have been under pressure for last one month due to overhang on the status of fees. Status quo on fees would help to retain investor sentiments as any increase in fees would have further escalated the below average performance on margins and volume growth. We maintain BUY on ACC and ACEM with revised TP of Rs1,770 and Rs280 respectively based on...

All India cement production in Oct-20 has increased by 3% YoY. Volume growth is led by pick-up in the construction activity and also supported by lower base of last year (Oct-19, volume -8% YoY). On cement prices, our interaction with cement dealers suggests at an all India level, cement price has decreased by ~1% MoM in Dec-20. Average cement price is down 3% in Q3FY21 vs. an average of Q2FY21. Region wise, baring north, the cement prices is down for other region in Q3FY21 vs. an average of Q2FY21. In Dec-20, imported coal price (adjusted for exchange rate) is up 7% MoM. But still, average coal price is down 19% in YTDFY21 vs. FY20. But...

Our cautiously optimistic stance on the cement sector (as highlighted in Cement Sector Update - Cautiously optimistic on FY22 recovery) has played out well.

All India cement production in September-20 has decreased by only 4% YoY. There has been a pick-up in the construction activity and we understand large players have witnessed a gain in the market share. As on Sept-20, Ultratech market share (by sales volume) has increased by 4%, ACC by 1%, Ambuja Cement by 1% vs. March-20 (Exhibit 11). On cement prices, our interaction with cement dealers suggests at an all India level, cement prices has increased by ~3% MoM in Nov-20. With Nov-20 month increase, average cement price is now down 2% in Q3FY21 (Oct, Nov) vs. an average of Q2FY21. Region wise, baring north, the cement prices...