Market Buzz

March 2011

January to March is generally a quarter of strong cement demand. However, the demand revival has not been to the extent of supporting a double-digit demand growth for the year 2011. The cement dispatches of the top four cement players witnessed a YoY growth of 10.8% in March v/s a robust 15.5% in February. The dispatch growth of top four cement majors in January stood at 6.3%.

The strict supply discipline maintained by the industry resulted in rise in cement prices by Rs.40-50 per 50 kg bag in the last 4-6 months. The YoY prices have risen by ~ 25-30% YoY, thus resulting in better and stronger Q4FY11E nos.

The strong Q4FY11 nos. is well factored in the prices of the cement stocks; however, demand revival remains a key challenge for the sector. We remain positive on the long-term prospects of the cement sector, however in near term we believe the sector will move sideways.