Construction Materials share price target

Our interaction with cement dealers across India suggest that an average cement price has increased by 2% MoM in May 21. This is 4th consecutive month of, MoM price hike by the industry. Over the last 4 months, price hike in East is highest followed up by the South region (Fig 1-6). Cost has moved up too, in May-21 imported coal price (adjusted for exchange rate) is up 2% MoM. On demand front, PIB release suggest India cement production increased by strong 33% YoY (supported by low base) but we note the absolute cement volume was still lower in Mar-21 versus Mar-19. On cement demand for April/May-21, our interaction...

Our channel check suggests, average cement price at an all India level is up 2% MoM in Apr-2021. Region wise, price increase is seen in East/West at 6%/ 5% MoM, North/South at 1% MoM and Central at flat MoM. Cost has moved up too, in Apr-21 imported coal price (adjusted for exchange rate) is up 5% MoM (3% from imported coal and 2% from INR depreciation). Energy prices have been moving up, as on April 21 imported coal price (adjusted for exchange rate) is up 7% vs average of Q4FY21. On demand front, all India cement production in Feb-21 has decreased by 6% YoY. However, in our dealer interaction for this month we gathered Cement...

Cement demand witnessed double digit growth during the quarter driven by strong demand from non trade segment and well supported by trade segment Insiitutional demand was particularly strong on the back of good traction from govt projects and infra related activities.

demand. Cement prices in East increased by Rs100/t QoQ, as it reached unsustainable levels in last quarter. Western region's prices witnessed increase of Rs40/t on back of stable prices in Gujarat and sharp increases in Maharashtra. Prices remained stable in South due to increase in AP, Tamil Nadu and Telangana,...

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...