- During Q4FY2006, the cement dispatches of all the three major players, Associated Cement Companies, Gujarat Ambuja Cement and the Aditya Birla Group, saw a handsome growth. The average price realisation also grew by a strong 8.6% in the quarter.
- Expect the cement division to be the top performer for Grasim Industries; however the poor performance of the viscose staple fibre and sponge iron businesses will drag down the profitability of the company.
- Expect Madras Cements Ltd (MCL) to register a healthy volume growth of 30% yoy in Q4FY2006 on the back of a strong demand in south India. With the elections round the corner, cement prices in the southern region declined by 3-4% yoy. However the implementation of the flat tax rate of 14.5% in Tamil Nadu as against the effective tax rate of 23% shall nullify the effect of the lower cement prices in the south. Consequently, expect MCL to register a strong 45% growth in its Q4FY2006 earnings.
- Shree Cement is likely to report a healthy volume growth of 11-12% driven by the commissioning of its new 1.2- million-tonne cement plant. This coupled with the impressive growth of 10-12% in the realisation is likely to lead to a high 50% growth in its operating profit.
Sector Performance - Cement
Cement: Healthy growth in dispatches of top three
