DSIJ.in JULY 22 - AUG 4, 2019 I DALAL STREET INVESTMENT JOURNAL (^51)
infrastructure (22 per cent), industrial & commercial (12 per
cent) and low-cost housing (12 per cent).
During FY19, the cement industry has achieved the highest
double-digit volume growth first time since FY10, led by
improving realisations in H2FY19. Also, the capacity
utilisations have improved which contributed to the growth
journey as the annual industry capacity utilisation rate
increased to ~71 per cent, showing improvement by 5 per cent
as compared with FY18.
Looking at the price of cement, in February 2019, the cement
companies have gone for price hike by 12-16 per bag. The major price hike was in southern region and the lowest price hike was in central and northern regions. The companies have also enjoyed cuts in their production cost from H2FY19. Almost 65 per cent of the pet coke in India is consumed by the cement industry and, recently, the prices of pet coke have dropped by nearly 16-18 per cent. The cement companies would benefit from this, resulting in an improvement in margins in the coming quarters. In our analysis, we have considered 19 cement companies according to their market capitalisation. During FY19, the aggregate sales of these companies grew by 12 per cent YoY. The aggregate operating profit of these companies grew by 10 per cent YoY and aggregate PAT grew by 9 per cent YoY. The cement major, Ultratech Cement reported 17 per cent YoY growth in terms of its revenue and 10 per cent YoY growth in operating profit in FY19. PAT also grew by 9 per cent YoY. Shree Cement reported 24 per cent YoY growth in terms of its revenue and 13 per cent YoY growth in operating profit in FY19. However, PAT has declined by 27 per cent YoY. Ambuja Cement reported 3 per cent YoY growth in terms of its revenue and 4 per cent YoY growth in operating profit in FY19. PAT also grew by 53 per cent YoY. ACC reported 4 per cent YoY growth in terms of its revenue and 7 per cent YoY growth in operating profit in FY19. PAT also grew by 65 per cent YoY. Dalmia Bharat Limited has reported growth in its revenue by 11 per cent YoY. However, EBITDA has declined by 4 per cent YoY. PAT has grown by 20 per cent YoY during FY19. The initiatives taken by the government in recent budgets such as25,000 crore allocation for affordable housing should spur
the demand for cement in coming times. Also, the demand
from infrastructure is witnessing growth at a faster pace, which
has been underpinned by the government’s thrust on
infrastructure development, viz. construction of roads, metro
rail projects, airports renovation, irrigation projects, etc.
Besides, there has been significant improvement in low-cost
houses constructed under the Pradhan Mantri Awas Yozana in
rural areas. The government is targeting nearly 18.5 million
houses during phase II FY22E. Similarly, the affordable housing
segment in the urban areas also gained momentum last year. In
terms of individual home building, the rural housing market
has shown demand traction in major markets. However, tier-2
and tier-3 urban markets are yet to pick-up. In tier-1 or metro
cities, with the stabilisation of RERA, the urban demand has
witnessed some improvement. Going forward, demand
traction, along with slower capacity addition, would further
improve utilisation level of the industry. Overall, we expect the
cement industry to grow at a steady pace supported by the
developing economy and supportive government policies.
EPS () YoY Growth FY19 (%) RoNW (%) Equity ( in Cr.)
FY19 FY18 FY17 Sales Operating Profit PAT EPS FY19 FY18 FY17 FY19 FY18 FY17
88.65 80.92 98.90 17.28 10.46 9.28 9.55 8.88 8.77 11.72 274.64 274.61 274.51
397.29 384.35 328.10 23.58 12.98 -26.67 3.37 16.68 18.41 18.86 34.84 34.84 34.84
10.97 7.64 5.57 2.96 3.97 53.21 43.59 13.75 9.54 9.46 397.13 397.13 397.13
80.97 49.23 35.05 4.23 7.10 65.31 64.48 15.19 10.06 7.52 187.99 187.99 187.99
15.97 15.18 38.76 10.54 -3.96 19.93 5.20 2.88 7.93 1.47 39.00 6654.00 6654.00
23.93 27.83 22.90 12.59 -6.13 -9.47 -14.03 14.18 18.88 18.45 23.56 23.56 23.81
34.12 41.41 25.42 4.74 5.97 -7.69 -17.61 11.29 15.50 10.43 77.27 69.93 69.93
7.89 4.65 3.20 12.40 -13.85 -9.28 69.80 25.64 18.25 14.10 41.92 41.92 41.92
4.69 7.29 0.11 11.83 5.06 -6.31 -35.60 3.06 6.44 0.33 58.85 58.85 58.85
2.16 4.92 3.80 6.22 -11.75 -64.17 -56.15 1.35 3.08 2.86 309.90 308.15 308.15
20.31 23.63 22.13 8.10 8.51 -5.43 -14.03 2.81 2.11 3.67 8.35 8.36 8.36
6.66 12.87 -1.92 12.97 -1.24 -48.25 -48.25 1.74 3.41 -0.60 20.40 20.40 24.00
135.88 108.21 73.19 11.75 28.58 25.72 25.57 16.77 15.12 11.40 7.47 7.49 7.49
6.94 5.94 7.24 9.79 -9.72 -2.99 16.94 15.81 14.97 20.48 12.89 12.89 12.89
-7.96 -35.79 -12.13 39.42 3380.47 NA NA -45.41 -115.30 -23.20 486.49 486.49 486.49
39.56 34.09 2.42 10.85 16.31 16.58 16.05 14.68 14.46 0.88 15.64 15.63 15.42
9.03 2.01 5.58 4.93 -91.56 NA 349.12 16.12 4.46 17.88 69.34 69.19 69.19
5.22 -3.60 0.09 1.52 NA NA NA 10.09 -12.14 -4.39 86.97 86.21 86.21
3.13 4.10 2.96 -38.61 -19.78 24.33 -23.71 11.05 16.26 13.05 20.15 20.15 20.15
martin jones
(Martin Jones)
#1