Economy & Market

Rerating Quarter

Published

9 years ago

April 30, 2017

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It’s time to revisit mid-cap stock valuations and there are potential target upgrades over the medium to long term, says VAIBHAV AGARWAL of PhillipCapital India.

Ground checks and interactions with various stakeholders in the cement industry suggest that significant potential upsides exist for mid-cap stocks over the medium to long term. Given a favourable demand scenario, we understand cement prices have been raised across pockets by ~10 per cent and further price hikes of 3-5 per cent cannot be ruled out in May 2017.

After the monsoon arrives, cement prices are unlikely to be increased until the end of H1FY18. Even if prices drop, we expect them to remain 5-6 per cent higher than March prices. The Goods and Services (GST) tax regime is unlikely to make an unfavourable impact on cement prices; if it benefits due to GST, the industry may pass on some of those gains. EBITDA may surge in FY18/19 if robust cement price hikes sustain. Rerating of valuations is imminent for mid-cap stocks and we do not rule out potential target upgrades in the medium to long term.

Positive Volume Commentary
Even assuming flat volumes in Q1, this will be a rerating quarter for the sector. We have seen volume commentary turning positive, but volume concerns persist in a few pockets (Tamil Nadu, Kerala and parts of Central India). Despite assuming flat volume growth for the sector, Q1 earnings are likely to surprise quite positively, driven by price hikes. In a conservative scenario (0 to -5 per cent), year-on-year (y-o-y) volume growth and with the current cement prices, Q1 sectoral EBITDA/tonne is likely to improve by 20-40 per cent quarter-on-quarter (q-o-q), 15-20 per cent y-o-y; absolute EBITDA could shoot up by a minimum of 15-20 per cent. With volumes turning favourable and no rollbacks in cement prices over the next two months, the potential is huge.

Mid-cap cash flows are robust and likely to accelerate debt repayments. Mid-cap stock valuations have always had the overhang of higher debt versus large caps. However, debt repayment for most mid-caps is likely to accelerate in Q1 as the sector sees robust cash generation. This will be a key rerating factor and is likely to drive valuations. We expect good sense will prevail in the sector and players will not rush in with fresh capex announcements.

Players are evolving and this makes prices more stable over the long run. Historically, price hikes have always been a call for concern (break in price discipline). We do not rule out intermittent price disturbances, but we understand that players are evolving.

Stable Pricing
Even newcomers to the industry understand the need for stable prices; they are also debt-ridden and cannot afford to operate in an unfavourable price scenario. This gives us confidence that price hikes are more sustainable than in the past. FY18 should be a turnaround year for stock valuations; we do not rule out the possibility of a partial rollback of the recent price hikes. However, even in a conservative scenario (if only 4-5 per cent price hikes sustain in FY18), EBITDA/tonne has the potential to improve by 10-15 per cent or even higher in certain cases.

Valuation gaps
The largest major of the sector trades at a per tonne valuation of $200, while most mid-caps trade at $70-120. As the scenario turns favourable and as mid-caps get rid of debt faster than expected, this valuation gap could narrow, to say, about 25 per cent discount to large-caps. The potential upsides can be huge.

We do not rule out potential target upgrades in the medium to long term; our current price targets for most mid-caps have built-in target valuations of $70-120/tonne. We see the valuation gap between mid-caps and large caps narrowing as sectoral dynamics turn favourable. We see further re-rating of mid-caps over the medium to long term.

Concrete

Fornnax Wins AIRIA’s Special Export Award for Rubber Machinery in 2025-26

Published

16 hours ago

October 19, 2026

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Fornnax Technology Pvt. Ltd. has been honoured with the Special Export Award – Rubber Machinery for 2025–26 by the All-India Rubber Industries Association (AIRIA), in recognition of its highest exports of tyre recycling plants to the European region.

With more than a decade of experience in India’s tyre recycling industry, Fornnax has contributed to the development of advanced recycling technologies and infrastructure. The company currently holds a 90% market share in India’s domestic tyre recycling sector, while exports account for 30% of its business, spanning markets such as Europe, Australia and the GCC.

The award marks another milestone for Fornnax, whose tyre recycling lines and advanced shredding technologies are supporting the growth of the circular economy in India and international markets.

Commenting on the recognition, Mr. Jignesh Kundaria, Founder and Director of Fornnax, said:

“This honour from AIRIA is a reflection of an incredible journey we have undertaken over the years. When we started Fornnax, there was no established recycling industry in India to follow. We chose to build for the future instead. Today, when you see India’s tyre recycling sector, it has already transformed into a dynamic, high-growth industry and we are extremely proud to have played our part in building it.”

Unlike standalone equipment suppliers, Fornnax focuses on developing complete, high-capacity recycling infrastructure. Its integrated systems combine multiple stages of shredding and size reduction to enable efficient, continuous operations. This system-level engineering approach helps recycling operators improve throughput, equipment reliability and operational consistency.

The recognition reinforces Fornnax’s commitment to developing engineering technologies that contribute to a more efficient and circular recycling ecosystem.

Looking ahead, the company aims to expand its international presence while continuing to develop advanced shredding and recycling solutions to address the growing volumes and evolving requirements of the global recycling industry.

For more information, visit: www.fornnax.com

Concrete

Wonder Cement appoints Mahesh Singh as VP Corporate Brand Communication

Published

2 weeks ago

October 9, 2026

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Singh brings 20+ years of brand and marketing experience, and will lead integrated corporate brand communication initiatives at Wonder Cement

New Delhi

Wonder Cement, a leading cement manufacturer, has appointed Mahesh Singh as Vice President – Corporate Brand Communication. In his new role, he will oversee corporate brand strategy and communication, including digital and performance marketing, public relations, trade, events, exhibitions, sports and experiential marketing.

Singh brings over two decades of experience across marketing and communications, with roles spanning the automotive industry, agencies and entrepreneurship. He spent more than a decade with Honda Motorcycle & Scooter India, working across integrated communication, media, digital, retail and consumer engagement. His stint also included helping build the company’s digital marketing capabilities.

He moved to dentsu X India as Vice President – Strategy & Planning, working across categories such as automotive, auto components, electric vehicles, FMCG, consumer electronics, BFSI, apparel and brand consulting. His responsibilities included media and marketing strategy, product launches, content, performance marketing and consumer activations.

Singh subsequently took an entrepreneurial route with Radiant Brands before joining Shriram Ltd (SPR Autotech) as Head – Marketing & Communications. There, his remit included brand and corporate strategy, communications, PR and ORM, retail identity, loyalty programmes and events.

At Wonder Cement, Singh will be responsible for bringing together the company’s corporate brand communication initiatives across digital, performance marketing, PR, trade, sports and experiential platforms. The role will focus on creating an integrated approach to communication across consumers, trade partners and other key stakeholders.

The appointment brings to Wonder Cement a marketer whose career has spanned the brand, agency and entrepreneurial sides of the communications ecosystem.

Wonder Cement, part of the RK Group, is a cement manufacturer with roots in Rajasthan and a focus on quality, trust and transparency. The company has grown to six manufacturing plants, and a cement capacity of 21.5 MTPA. With more than 2,000 employees and a network of over 5,000 dealers, its operations span manufacturing, distribution and customer engagement, with a focus on consistent product quality and efficient execution.

Concrete

JSW Cement commissions additional 1 MTPA grinding unit at Nagaur

Published

2 weeks ago

October 8, 2026

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With this commissioning, JSW Cement’s total cement grinding capacity has increased to 25.10 MTPA,
Mumbai

JSW Cement, one of India’s leading green cement producers and part of the diversified JSW Group, today announced the successful commissioning of an additional 1.00 MTPA cement grinding unit at Nagaur, Rajasthan. The commissioning marks another significant milestone in the Company’s growth strategy.

With this commissioning, JSW Cement’s total cement grinding capacity has increased to 25.10 MTPA, while its total clinker manufacturing capacity, including clinker capacity at its joint venture, JSW Cement FZC, stands at 9.74 MTPA.

JSW Cement had commenced operations in North India in March 2026 with the Nagaur Integrated Plant, comprising a 3.30 MTPA clinkerisation unit and 2.50 MTPA cement grinding unit. With the commissioning of the additional 1.00 MTPA cement grinding unit, the plant’s total cement grinding capacity has increased to 3.50 MTPA, enhancing the company’s ability to cater to the growing cement demand across Rajasthan, Haryana, Punjab and the National Capital Region (NCR). The expansion has been funded through a strategic mix of equity and long-term debt.

During the quarter ended 30th September 2026, JSW Cement has also commissioned the Alternate Fuel Handling System and the Waste Heat Recovery system (WHRS) at the Nagaur Integrated Plant.

Nilesh Narwekar, CEO, JSW Cement, said: “The commissioning of additional 1.00 MTPA grinding capacity at Nagaur is a key strategic priority for us and will accelerate JSW Cement’s expansion into North India. We look forward to servicing the growing needs of the region and contributing to the economic growth of Rajasthan, Haryana, Punjab and the NCR area. I am delighted to share that the company has commissioned this grinding unit within the expected timeline, showcasing our project execution capabilities. Further, the Alternate Fuel Handling System and the Waste Heat Recovery system (WHRS) are expected to substantially reduce our production costs going forward.”