In the company's key cement division, its realisations improved an estimated 29% YoY to . 4,172 per tonne in the first quarter of FY12, while dispatches declined nearly 12.8 %. Other leading players in the South, like Madras Cement, also improved their realisations by nearly 20.7% YoY on a per-tonne basis in the first quarter of FY12.
According to analysts' estimates, total cement despatches in the South declined nearly 5.4% YoY in the first quarter of FY12. India Cements' smaller divisions include its presence in the cricket series IPL, coupled with vessels involved in coastal shipping. However, the turnover of these two smaller activities is less than 10% of its net sales. Strong cement realisations helped India Cements' net profit rise 308% YoY to . 102 crore in the June 11 quarter. South-based players had also maintained production discipline in the March 11 quarter and it had also helped them report an improved performance in that quarter.
The India Cements stock ended Monday's trade 1.75% higher at . 70. And despite the improved performance in the June quarter, investors are skeptical of the broader sector, with the India Cements' stock hovering above its recent 52-week low. And that's because rising home finance rates have cast a shadow on demand from key users.
Going forward, the September quarter is the monsoon quarter and there is curtailed construction activity across the country. Also, the cement companies' ability to manage rising operational costs would remain key.
India Cements trades at a P/E of 14.8 times on a trailing four-quarter basis. Rival, Madras Cements trades at 9.5 times.
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