Cement sector Feb'13 sales seen 6-7% down

Ultratech reported sales volumes at 3.31 MT in Feb'13, 6% lower than those in Feb'12

The weakness in cement demand continued to be reflected in the dispatches numbers reported by the companies for the month of February ‘13.

India’s largest cement producer Ultratech reported sales volumes at 3.31 MT in February’13 that were 6% lower than those in February’12.  

Shree cement the other North India based player saw 16% month-on month and decline in sales to 9,67,000 tonnes in February’13. Though the company release did not mention year-on-year comparison Analysts estimate the sales to have declines 12% year-on-year.

Even as other large caps companies like ACC and Ambuja have stopped giving their monthly production and dispatches figures however Mihir Jhaveri and Prateek Kumar at Religare estimate the Large cap companies (ACC Ambuja And Ultratech) to have seen a decline in the range of 5-12%.

They expect Industry as a whole to report 6-7% drop in sales during the month of February.

The drop in sales during the month of February is being attributed to the two days All-India strike and Maha kumbh festival in Uttar Pradesh which affected labor availability and hence construction activities.

However the demand has remained subdued for long. The sluggishness in demand that started from the month of November’12 post the festival season setting in has continued to remain so ever since with spell of cold in the North setting thereafter and has not recovered as yet which leads to concerns.

The impact of the same can be seen in the stock prices. After touching 52 week highs in the month of October’12 ACC and Ambuja have lost 16.8% and 13.6% respectively while and Ultratech has lost 9.45% on the bourses.