Industry Analysis (5/10)
#ULTRACEMCO cement is trading at 17% lower and #JKCEMENT is trading at 25% lower from their respective 52-week Highs, what exactly happened to the cement Industry? Let’s delve deep into the Cement Industry.
India is the second largest producer of cement in the world and it accounts for more than 7% of the world’s installed capacity. Demand for Infrastructure construction and housing for all drivers the demand for the Cement industry.
🌟 Cyclicity: When the economy is not performing well, citizens do not have the necessary income to spend on construction, and the government also imposes curbs on infrastructure spending.
🌟 Value Chain
➡️ Procurement (Raw Material from Lime quarries)
➡️ Manufacturing (Raw material to cement)
➡️ Distribution (Storage, Transportation)
➡️ Sales & Marketing (Packaging, Promotion, Advertisements)
🌟 Revenue Drivers
➡️ Sale of Cement
➡️ Interest Income
🌟 Cost Drivers
➡️ Transportation (Cement being Bulky attracts high storage and freight costs)
➡️ Raw Material costs.
➡️ Power and Fuel costs (Coal and Electricity involved in the production of cement)
🌟 Growth Drivers
➡️ Economic conditions (Good economic conditions can lead to both consumer spending and private investment)
➡️ Supply Chain efficiency (Technology involvement, Production in own country)
🌟 Key Market Players
The cement Industry has been always under the scanner for its inefficient supply chain, lack of R&D and sub-par technology. Consequently, the market has been witnessing a price decline in major cement stocks. If we were to list out the factors that led to this situation:
🔻 Decline in Demand (Government’s reluctance on infrastructure spending)
🔻 High Costs (Expanded fuel costs led to increased production costs)
🔻 Exports decline (Strong dollar leading to profit erosion)
While keeping these factors in mind, one can safely say that with improved economic conditions, cement stocks are likely to generate wealth for the investors.
*India breaks shackles of US and Saudi Arabia, For the first time buys Petro coke from Venezuela at huge discounted price despite US concerns.*
*160000 ton already arrived and 80000 tonne in transit.*
*Petro coke is used in cement industries.*
*Earlier India was dependent on USA and Saudi Arabia for Pet coke.*
Combined Weightage of 32-35% in NIFTY
Risk of big gap up or gap down will be there on Monday.
#NIFTY50 #RELIANCE #ULTRACEMCO #BANDHANBNK #JSWSTEEL #ICICIBANK #KOTAKBANK #INFY
UltraTech Cement, the country’s largest maker of the building material, said it would spend ₹12,866 crore on adding 22.6 million tonnes per annum capacity.
The announcement comes just weeks after the Aditya Birla group flagship lost the race to acquire Holcim’s India cement assets to billionaire Gautam Adani. The acquisition is set to make the Adani Group the second-biggest cement maker in the country and the chief rival of UltraTech.
The race to expand capacity comes as the government plans to spend a record ₹7.50 trillion this year to build roads and ports, writes Swaraj Singh Dhanjal.
Good News :
1. Opec+ countries will increase oil production from July.
2. Open offer of Eveready will open today.
3. Ultratech board gives approval for expansion plan of worth Rs12886 crore.
4. GR Infra deal with NHAI for road project.
5. Promotor of Prudent Corporate buys 4.25 lakhs shares from Market.
1. Sunlife insurance sells 1.3 lakhs shares of Arvind.
Chemical, Finance, Pharma and Textile stocks will go upside today.
Investors Meetings on May 31
UltraTech Cement: The company's officials will meet Fidelity International.
FSN E-Commerce Ventures (Nykaa): The company's officials will participate in Citi's Flagship Pan Asia Regional Conference 2022.
Gateway Distriparks: The company's officials will participate in investor conference organised by Nirmal Bang Institutional Equities.
Tata Consumer Products: The company's officials will meet Jefferies.
Tube Investments of India: The company's officials will meet Premji lnvest.
GMM Pfaudler: The company's officials will attend Ambit Conference.
Apollo Tyres: The company's officials will meet Batlivala & Karani Securities India.
Stocks in News
Life Insurance Corporation of India: The country's largest life insurance company recorded an 18 percent year-on-year decline in profit at Rs 2,371.55 crore for the quarter ended March 2022. However, net premium income rose by 18.2 percent to Rs 1,43,746 crore during the same period.
Campus Activewear: The fashion and athleisure footwear brand reported a 296 percent year-on-year growth in consolidated profit at Rs 39.60 crore in quarter ended March 2022, driven by operating income and topline, and lower tax cost. Revenue grew by 28 percent to Rs 352.3 crore during the same period.
Sun Pharma: The pharma major recorded loss of Rs 2,277.2 crore for the quarter ended March 2022 dented by exceptional loss, against profit of Rs 894.1 crore in the same period last year. EBITDA increased by 14.6 percent YoY to Rs 2,279.7 crore in Q4FY22. Revenue grew by 11 percent YoY to Rs 9,446.8 crore in Q4FY22 with India formulation sales rising 16 percent, US formulation growth of 5 percent, emerging markets formulation sales increasing 7 percent and Rest of World formulation sales rising 7 percent YoY.
PC Jeweller: The company posted a loss of Rs 173 crore in March 2022 quarter against a profit of Rs 60 crore in the same period last year on lower revenue. Revenue from operations declined sharply to Rs 189 crore in Q4FY22, compared to Rs 868 crore in the corresponding period last year.
Wockhardt: The pharma company posted loss of Rs 311 crore in the quarter ended March 2022, widened from loss of Rs 107 crore in the same period last year. Revenue grew marginally to Rs 655 crore during the quarter, up from Rs 632 crore in the same quarter last year.
IRCTC: The company recorded a 106 percent year-on-year growth in profit at Rs 213.8 crore in the quarter ended March 2022 driven by strong topline and operating performance. Revenue surged 104 percent to Rs 691 crore compared to the same period last year.
Dilip Buildcon: The company posted loss of Rs 41.09 crore for March 2022 quarter against profit of Rs 186.2 crore in the corresponding period last year, impacted by operating loss and lower topline. Revenue declined 15 percent YoY to Rs 2,663.7 crore in Q4FY22. The company appointed Sanjay Kumar Bansal as Chief Financial Officer in place of Radhey Shyam Garg, who has been designated as President - Finance.
Lemon Tree Hotels: The company has signed a Licence Agreement for a 40-room hotel at Chirang, Assam under its brand 'Keys Select, by Lemon Tree Hotels'. The hotel is expected to be operational by June 2026. Subsidiary Carnation Hotels Private Limited will be operating this hotel.
GST(Goods and Services Tax) collection for April 2022 has touched its all-time highest level of INR 1.68 lakh Cr. The second highest GST collection of INR 1.42 lakh Cr was in March 2022, which is INR 25,000 Cr lower than that of April 2022. The successive growth in GST collection shows the improvement in economic activities in the country and the compliance behaviour of taxpayers.
Vinidhan - The Student Investment Fund presents - The Weekly Wrap (29th April 2022)
Weekly Wrap_MAY 01.pdf - 777 KB
#ULTRACEMCO #MARUTI #RELIANCE #MacroEconomy #NIFTY50
Sharekhan target on ULTRACEMCO
Price @ Call: 6571
#HDFCBANK #ICICIBANK #JKCEMENT #ULTRACEMCO
This view is based on volume, oi, delivery data & price action.
ALL Posts are for educational purposes only & not any recommendation
POSSIBLE BULLISH -> #APOLLOTYRE #CANFINHOME #ULTRACEMCO
POSSIBLE BEARISH -> #AXISBANK
#ULTRACEMCO will declare results on Jan 17, 2022
Do you have any view on the results? Let's aggregate whatever information we have from other sources for everyone's benefit.
In FY22, cement production is predicted to rise 10%-12%, with utilization hovering around 65%. As a result of the government's recent announcements, which include increased infrastructure spending, the economy has been reviving, which has resulted in increased cement demand. In Q2FY22, the Indian cement businesses were unable to maintain the trend of Q1FY22 even after boosting prices. Q2FY22 was a seasonally bad quarter for Indian cement manufacturers. With the arrival of the monsoon, cement demand usually takes a back seat due to a reduction in construction activity, resulting in price correction. Cement prices in India declined 4% to INR 356 per 50 Kg pack in August 2021, MoM. Despite this periodicity, Central India was the least affected in August, with a minimum price correction of INR 3 per bag compared to the previous month. The monsoon and intense competition were two significant factors in the price decline.
Large states like Madhya Pradesh and Uttar Pradesh, on the other hand, reported a substantial increase in trade sales in August after a weak July 2021, owing to improved rural demand, higher individual home building demand from incomplete projects, and a revival of infrastructure demand with the restart of government projects. As a result, in Q2FY22, central India outpaced other regions in terms of demand growth. This was also the reason why cement prices generally remained rangebound in the market. Cement prices in south India, on the other hand, fell by 7% in August 2021. In August 2021, cement prices in the north and east fell by 3% month over month. Heavy rains in West India have lowered prices.
For most cement companies, the advantage of low-cost inventory has now faded. In this context, a further drop in cement prices at the national level would result in smaller margins for cement producers in the following months. However, if current demand holds, dealers estimate a price increase of INR 5-10 per bag in the coming quarters. It should be noted that cement prices have been rising in India in recent months to fight rising ingredient costs. The volatility in the pricing of essential input materials is an essential aspect for the business. Cement producers are still grappling with rising energy and freight prices. Petroleum coke prices have grown by 40% in FY22, reaching roughly USD 160 per tonne. In FY22, international coal prices grew by a similar amount.
#AMBUJACEM #ACC #ULTRACEMCO #SHREECEM
Today stock to trade
Hem Securities target on ULTRACEMCO
Broker: Hem Securities
Price @ Call: 7323
02/12/2021 Market Views of Nifty , BankNifty with BreakOut/Down Stocks | MOTHERSUMI | ULTRACEMCO
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1 #EICHERMOT 2400 CE
85 >----------------------> 140
2 #CONCOR 640 CE
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3 #ULTRACEMCO 7500 CE
4 #FEDERALBNK 90 CE
LOW CAPITAL CALL
5 #HCLTECH 1300 CE @ 3.25 >--------------->3.45
AND MANY MORE INTRADAY AND POSITIONAL CALLS
DAY CLOSED IN GREEN 💚💚💚💚💚💚
C. OPTION : BUY ULTRACEMCO NOV 7900 PE ABV 106 SL BELOW 40 TGT 185.
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💥 DIWALI PICKS 💥
TGT - 1300 / 1500 / 1700
TGT - 8500 / 9500 / 11000
TGT - 600 / 700 / 950
TGT - 9000 / 10000 / 11000
TGT - 350 / 400 / 500
TGT - 2450 / 2500 / 2600
Geojit Financial Services target on ULTRACEMCO
Broker: Geojit Financial Services
Price @ Call: 7127
Nirmal Bang target on ULTRACEMCO
Broker: Nirmal Bang
Price @ Call: 7399
Prabhudas Lilladher target on ULTRACEMCO
Broker: Prabhudas Lilladher
Price @ Call: 7399
POSSIBLE BULLISH STOCKS for coming days
This view is based on volume data, oi data, delivery data & price action
posts are for educational purposes only & not any recommendation
Keep an eye on CEMENT SECTOR !!!
#NIFTY50 #ULTRACEMCO #AMBUJACEM #ACC
#ULTRACEMCO moving higher cmp 7627+ sl 7581
UltraTech is the largest cement-maker in India with a domestic capacity of 111.4 metric tonnes. This is 23 percent of the total market, giving it a leadership position in most regions.
Its revenues also jumped 54.2 percent to Rs 11,830 crore as against Rs 7,671.1 crore, YoY. It reported a growth of 47 percent in its sales volume that grew to 20.53 million tonnes.
The net profit of the company beat the CNBC-TV18 analysts' poll estimates of Rs 1,428 crore. But its revenue was slightly lower than what analysts had estimated (Rs 11,980 crore).
The company's EBITDA increased nearly 60 percent to Rs 3,307.5 crore from Rs 2,077.7 crore. Its EBITDA margin also improved by 88 basis points to 27.96 percent (from 27.08 percent, YoY). Its capacity utilization also improved to 73 percent, as compared to the 46 percent a year ago.
Here's what brokerages have to say on UltraTech Cement's stock and Q1 earnings:
JPMorgan has a 'neutral' rating on the stock with a target price of Rs 6,890 per share. It says that despite the fact that the company has beat the first-quarter expectations, its cost pressures are very high.
The second half of the financial year needs large hikes for positive surprises, the brokerage added.
"Market leadership, strong brand with highest retail presence and robust balance sheet justify UltraTech's premium valuation," ICICI Direct said in a report.
We are positive on the company, it said, majorly because of its target to become net debt-free by FY23E and expected ROCE of 17 percent-plus.
ICICI Direct has a 'buy' rating on the stock with a target price of Rs 8,700.
Macquarie has a 'outperform' rating on the stock with a target price of Rs 8,542 per share on the backs of its expansion projects. The brokerage expects the company to give an industry-leading growth over FY21-24.
It said that the sustained cost improvement and balance sheet deleveraging will support the earnings and valuations of the company.
HDFC Securities also has a 'buy' rating on the stock with a higher target price of Rs 8,155 on the backs of the company's best-ever consolidated EBITDA margin.
Amidst lower QoQ sales due to the impact of lockdown, robust pricing, and health cost controls moderated its consolidated net sales and EBITDA decline to 18 and 10 percent QoQ, resulting in a rise of 54 and 59 percent YoY on a low base.
"We continue to like UltraTech for its strong volume focus along with superior margin delivery and working capital (WC) controls," the brokerage said.
UltraTech has beat our volumes/EBITDA estimates by 11.8 and 40.6 percent on a YoY basis, which was driven by lower clinker cost and higher than expected net realisations, Yes Securities said.
The brokerage has upgraded its EBITDA estimated by 12.6 and 13.5 percent for FY22E and FY23E, respectively. It has done so on the backs of realigning raw material, fuel, and transportation costs which it had estimated higher. It has also taken into account the better pricing outlook as compared to its previous expectations.
Currently, UltraTech is trading 14.2 times the forward estimates of its FY23 earnings, it said. "On the backs of higher demand outlook and better than expected profitability we assigned 16x FY23E EV/EBITDA which translates in a price target of Rs 8,600 per share with potential upside," the brokerage said.
Yes Bank has a 'buy' rating on the stock, with a target price of Rs 8,600.
The brokerage has a 'outperform' call on the stock and it has raised the target price to Rs 8,000 from Rs 7,735. It said that while its profit numbers exceeded expectations and the EBITDA is 15 percent higher than expectations, cost inflation may impact UltraTech's earnings.
The company's EBITDA/tonne increased 17 percent QoQ, above our estimates due to lower costs, but we expect profitability to taper down, the brokerage said.
The company is likely to turn net cash positive by FY24 and its risk-reward ratio is fair at its current valuation, it said.
#ULTRACEMCO looks bullish with respect to results.
#CANBK #COLPAL #CUMMINSIND #MUTHOOTFIN #ULTRACEMCO