Motilal Oswal - MOSL: CEMENT-Price hikes across regions; Is consolidation finally reflecting in pricing power or is it transient?

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MOSL: CEMENT-Price hikes across regions; Is consolidation finally reflecting in pricing power or is it transient?

Cement: Price hikes across regions; Is consolidation finally reflecting in pricing power or is it transient?

Across India, cement players hiked prices by INR20/bag in Apr’19; followed by another hike of INR10-30/bag in May’19, which was partly rolled back towards end-May.
Pan-India, current prices are INR25/bag higher than the average prices witnessed in 4QFY19. Prices have increased (v/s 4QFY19 average prices) by INR40/bag in the North, INR6/bag in the South, INR37/bag in Central India, INR23/bag in the East, and by INR26/bag in the West. Further, we have observed that the price hikes are more prominent in markets (the North and Central India) that have seen substantial consolidation in the last few years.
We are currently factoring in INR7-8/bag increase in realization for FY20/21. Should the current price hikes sustain, it will lead to an earnings upgrade of over 25% for large-cap companies and over 50% upgrade for mid-cap companies (given higher sensitivity to realization). Also, valuations seem almost in line with LPA for large-cap companies and at substantial discount for others.

04/06/2019 1 EN

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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MOSL: CEMENT-Price hikes across regions; Is consolidation finally reflecting in pricing power or is it transient?

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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