Motilal Oswal - MOSL: CEMENT-Expect pricing volatility in short term in Central markets-However, long-term attractiveness of the region remains intact

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Motilal Oswal

MOSL: CEMENT-Expect pricing volatility in short term in Central markets-However, long-term attractiveness of the region remains intact

â€‹CeMENT: Expect pricing volatility in short term in Central markets; However, long-term attractiveness of the region remains intact

Jaiprakash Associatesâ€™ (JPA) Satna cluster units in Central India are operating at less than 30% utilization due to working capital issues. With the completion of JPAâ€™s acquisition by UltraTech Cement (UTCEM) in 1QFY18, we expect UTCEM to ramp up the utilization of these assets to up to 60% over the next 6-9 months.
Increased utilization of JPAâ€™s assets in the Satna cluster would result in 6-7% higher supply in the Central markets. Hence, there might be volatility in cement prices in the region, at least in the short term.
This does not, however, change the long-term attractiveness of Central India as a cement market. With healthy volume growth and minimal additional supplies (other than from JPA), the longer-term price trajectory should resume.
We believe UTCEMâ€™s increasing presence in a market dominated by tier-II players would improve the overall business dynamics in the region.

23/03/2017 4 EN

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Motilal Oswal

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MOSL: CEMENT-Expect pricing volatility in short term in Central markets-However, long-term attractiveness of the region remains intact

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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