Economy & Market

Industry hopes for better performance in Q3

Published

8 years ago

August 31, 2017

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Vaibhav Agarwal of PhillipCapital reviews the first quarter that ended on July 31, 2017 and takes a peep into the next quarter.

In general, the cement market will see little or no improvements in Q2. It will continue to have negative demand and price corrections of Rs 200 to 400 per tonne may take place.

We suggest any stock price corrections should be considered a good buying opportunity.

While, UltraTech is hard pressed to generate volume after taking over Jaypee plants, it is also facing challenges in adopting Jaypee’s distribution network. It appears to be losing its premier position after acquiring Jaypee plants. Capacity utilisations of acquired Jaypee units need to be taken up to 50 plus percent. Currently it is throttled at 25 to 30 per cent that needs to be taken up as early as possible. The timing of Jaypee’s plant acquisition has not worked in its favour. Given these unprecedented challenges, we still give UltraTech the benefit of doubt and recommend buy whenever possible.

The inside information at ACC; which is a dark horse, indicates that significant changes are ahead in terms of management and strategies. Our checks suggest that the ongoing evaluation of its merger with Ambuja implies huge transaction costs in form of stamp-duty fees, transfer charges, etc. This is also a major challenge, especially from ACC’s perspective for sustaining valuations.

ACC’s management is focused on addressing its cost concerns. Generally the performance goes down in the second half of the year. ACC is currently trading at a 20 to 30 per cent discount to other large-cap companies. The merger between ACC and Ambuja should take place in the next 12 months. It will save distribution and manpower costs. The demand for Q2 is going to remain subdued. The issues like to GST, RERA, sand-mining needs to be handled correctly. The rural demand is then likely to pick up, while Ambuja is a play on its expected merger with ACC.

The demand pick up in the cement sector is going to happen from the rural segment. Infrastructure demand revival is still away and can be seen only in FY19. Also, next fiscal being a pre-election time, demand pull is more likely to happen. While our top pick UltraTech, we maintain our rating a wait-and-watch approach for ACC.

Considering the opportunity for acquisitions still available both organic / inorganic growth will be seen in the next two to three quarters. Sizable assets in north and west India are there for sale and could be acquired by leading manufacturers within next year. Dalmia Bharat seems to be ahead in the race as it will help the company to get acknowledged as a pan- India player. Right now the company is into a brand building exercise and pushing its volume. It has a positive sentiment among the dealer network. On the other hand, Shree Cement will continue to deliver volume growth, to touch a volume of plus 40 million tonne (+50 per cent of current capacity) by the end of FY19. It is understood that Shree Cement will start trial marketing in south region from January 2018, as it is going to commission its grinding unit in Karnataka with clinker supplied through its Chhattisgarh unit. Stock price corrections are a buying opportunity.

Though we expect near-term pain, the sector’s outlook looks positive from Q3. We reiterate buy on our top picks as stated above.

Economy & Market

Hindalco Buys US Speciality Alumina Firm for $125 Million

Published

1 day ago

June 25, 2025

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This strategic acquisition marks a significant investment in speciality alumina, a key step by Aditya Birla Group’s metals flagship towards becoming future-ready by scaling its high-value, technology-led materials portfolio.

Hindalco Industries, the world’s largest aluminium company by revenue and the metals flagship of the $28 billion Aditya Birla Group, has announced the acquisition of a 100 per cent equity stake in US-based AluChem Companies—a prominent manufacturer of speciality alumina—for an enterprise value of $125 million. The transaction will be executed through Aditya Holdings, a wholly owned subsidiary.

This acquisition represents a pivotal investment in speciality alumina and advances Hindalco’s strategy to expand its high-value, technology-led materials portfolio.

Hindalco’s speciality alumina business, a key pillar of its value-added strategy, has delivered consistent double-digit growth in recent years. It has emerged as a high-growth, high-margin vertical within the company’s portfolio. As speciality alumina finds expanding applications across electric mobility, semiconductors, and precision ceramics, the deal positions Hindalco further up the innovation curve, enabling next-generation alumina solutions and value-accretive growth.

Kumar Mangalam Birla, Chairman of Aditya Birla Group, called the acquisition an important step in their global strategy to build a leadership position in value-added, high-tech materials.

“Our strategic foray into the speciality alumina space will not only accelerate the development of future-ready, sustainable solutions but also open new pathways to pursue high-impact growth opportunities. By integrating advanced technologies into our value chain, we are reinforcing our commitment to self-reliance, import substitution, and building scale in innovation-led businesses.”

Ronald P Zapletal, Founder, AluChem Companies, said the partnership with Hindalco would provide AluChem the ability and capital to scale up faster and build scale in North America.

“AluChem will benefit from their world-class sustainability and safety standards and practices, access to integrated operations and a consistent, reliable raw material supply chain. Their ability to leverage R&D capabilities and a talented workforce adds tremendous value to our innovation pipeline, helping drive market expansion beyond North America.”

An Eye on the Future

The global speciality alumina market is projected to grow significantly, with rising demand for tailored solutions in sectors such as ceramics, electronics, aerospace, and medical applications. Hindalco currently operates 500,000 tonnes of speciality alumina capacity and aims to scale this up to 1 million tonnes by FY2030.

Commenting on the development, Satish Pai, Managing Director, Hindalco Industries, said the deal reinforced their commitment to innovation and global expansion.

“As alumina gains increasing relevance in critical and clean-tech sectors, AluChem’s advanced chemistry capabilities will significantly enhance our ability to serve these fast-evolving markets. Importantly, it deepens our high-value-added portfolio with differentiated products that drive profitability and strengthen our global competitiveness.”

AluChem adds a strong North American presence to Hindalco’s portfolio, with an annual capacity of 60,000 tonnes across three advanced manufacturing facilities in Ohio and Arkansas. The company is a long-standing supplier of ultra-low soda calcined and tabular alumina, materials prized for their thermal and mechanical stability and widely used in precision engineering and high-performance refractories.

Saurabh Khedekar, CEO of the Alumina Business at Hindalco Industries, said the acquisition unlocked immediate synergies, including market access and portfolio diversification.

“Hindalco plans to work with AluChem’s high performance technology solutions and scale up production of ultra-low soda alumina products to drive a larger global market share.”

The transaction is expected to close in the upcoming quarter, subject to customary closing conditions and regulatory approvals.

Concrete

Shree Cement reports 2025 financial year results

Published

1 week ago

June 17, 2025

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Shree Cement posted revenue of US$2.38 billion for FY2025, marking a 5.5 per cent decline year-on-year. Operating costs rose 2.9 per cent to US$2.17 billion, resulting in an EBITDA of US$528 million—down 12 per cent from the previous year. Net profit fell 50 per cent to US$141 million. The company reported cement sales of 9.84Mt in Q4 FY2025, a 3.3 per cent increase from 9.53Mt in Q4 FY2024, with premium products making up 16 per cent of total sales.

Image source:https://newsmantra.in/

Concrete

Rekha Onteddu to become director at Sagar Cements

Published

1 week ago

June 17, 2025

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Sagar Cements has announced the appointment of Rekha Onteddu as a non-executive independent director, effective 30 June 2025. According to People in Business News, Rekha Onteddu is currently serving in a similar capacity at Andhra Cements, the parent company of Sagar Cements.

Image source:https://sagarcements.in/