TANMAY OBSERVES!

Cement Sector: The recent reduction in excise duty from 12% to 8% and the Government's effort to revive the ailing realty sector brought in new hopes for the battered cement stocks over the week. The cut in excise duty and drop in coal prices will bring down cost of production to Rs 12.50 for a 50 kg bag.

Diesel down Cement transportation cost domestically may also come down with the cut in diesel prices. The reduction of 5 to 6% in diesel prices will result in 1.5 to 2% drop in freight rates for cement companies, depending on the road and rail transport mix. Companies will also benefit on transportation of fly ash — an important raw material — besides clinker to the grinding units-BL

http://www.thehindubusinessline.com/2008/12/13/stories/2008121351601100.htm

India Cement: Cmp=Rs.95

Book value=Rs.92

Face value=Rs.10

Trailing 12 earning=20.89 P/E=4.55

http://www.indiacements.co.in

• The Company is the largest producer of cement in South India.
• The Company's plants are well spread with three in Tamilnadu and four in Andhra Pradesh which cater to all major markets in South India and Maharashtra.
• The Company is the market leader with a market share of 28% in the South. It aims to achieve a 35% market share in the near future. The Company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimization of existing plants as well as by acquisitions.
• India Cements also acquired the franchisee rights of the Chennai Super Kings cricket team in the recent Indian Premier League for a phased US$91m payment through a bidding process. Media reports suggest that the team broke even in the first year itself. Its stake in the Chennai Super Kings cricket team of the Indian Premier League may be value-accretive given the huge success of the team and its good performance.

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