The much expected post-Diwali bounceback failed to materialise. Two key supplier regions of the north and south saw pricing slippage and all-India November exit prices are only marginally higher than 2QFY14 average. This is a cause for concern, especially as we head into the peak season with little demand traction. Volumes have taken a beating in November after two good months in September-October. Some respite is expected in the north in December as issues around sand supplies are likely to ease in Rajasthan and electoral processes draw to a close. Shortage of funds however, remains a key issue, affecting both builder demand and lengthening working capital cycles for dealers/stockists. This is unlikely to be addressed soon. We remain cautious on large caps as valuations defy ground realities.
Average quarterly prices were lower by 0.8% QoQ (-1.4% YoY). North (+3.5% QoQ) and west (1.1% QoQ) were better off, while south (-3.0% QoQ) and east (-3.8% QoQ) were the worst.
As per DIPP data, cement production grew 1.0% YoY in October 2013. YTD growth in production is 4.0%. November is expected to be a weak month.