Every Analyst is now a Macro Analyst and we read/hear all discussions on what is happening in Europe/US and Indian Government Inaction/Politics. Now, When we talk to investors we see their frustration/disappointment near peak towards Indian Politics. No wonder some technical analysts have started giving lower target of Nifty below 4000/3000 etc :-). Looking at current bleak Business enviornment due to Political Inaction etc We are inclined to believe that we may see some dramatic change in political situation for better. What will happen we don't know but this kind of time can not and will not continue looking at our history. Investors have forgotten it took only 1 day(18-May-2009) to change India's sentiment from Negative to Positive. Any sharp fall if at all happens will be final downfall we feel. At the same time we feel market will be in range for next 1-2 years so only stock pickers will be able to make money.
We feel south based cement companies are in last phase of down cycle. We are hopeful about their out-performance so advisng investors to take exposure in them . Cement prices are around Rs 300/bag in southern India, higher by Rs 40-45 over last year. Inspite of low demand season and higher capacities we see that prices are holding firm at present levels due to established players' proven pricing power in the market. After monsoon cement demand may see boost from the metro rail project and Housing activities so it means companies currently benefitting from pricing may benefit from pricing and volume both post monsoon when demand picks up. Top 3 players which are also most reputed promoters are available around 6-7 forward FY12 PE, less than twice BV and EV/Tonne from $60 to $120/tonne at a time when their OPM is above 30% is like a steal IF someone believes demand will pick up over next 1-2 quarters.
See below top 3 players last 6 Q results:
We feel south based cement companies are in last phase of down cycle. We are hopeful about their out-performance so advisng investors to take exposure in them . Cement prices are around Rs 300/bag in southern India, higher by Rs 40-45 over last year. Inspite of low demand season and higher capacities we see that prices are holding firm at present levels due to established players' proven pricing power in the market. After monsoon cement demand may see boost from the metro rail project and Housing activities so it means companies currently benefitting from pricing may benefit from pricing and volume both post monsoon when demand picks up. Top 3 players which are also most reputed promoters are available around 6-7 forward FY12 PE, less than twice BV and EV/Tonne from $60 to $120/tonne at a time when their OPM is above 30% is like a steal IF someone believes demand will pick up over next 1-2 quarters.
See below top 3 players last 6 Q results:
Disc: Above stocks are held by clients/family members.
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2 comments:
I would be unwilling to invest in a company like south indian cement simply because the business is to hard to predict their are to many ups and downs in the cement business
Dennis The Menace,
South Indian Cement is NOT a name of a company. I was talking about Madras Cements, Chettinad Cements and India Cements.
About Cyclical nature of cement it applies to every industry.
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