My Best Pick 2016

Jigar Shah

Jigar Shah of Kim Eng Securities is betting on Dalmia Bharat to make the most of growing demand for cement in the northeast

Soumik Kar

FY15 was a challenging year for the cement industry, which grew by just 3.5%, but this challenging period saw a wave of consolidation sweeping through the industry, with UltraTech and Holcim reinforcing their first and second spots, and with the 24 million tonne (mt) Dalmia Bharat Enterprises (DBEL) grabbing the third place. It’s pertinent to note that Dalmia Bharat has managed to enhance its presence in the south by emerging as one of the top five cement producers in the Andhra Pradesh and Tamil Nadu markets and now has a ready plant in Karnataka that will start commercial production by next month. Thus, Dalmia’s total capacity in the south stands at 11.5 mt, with a market share of 8%. Among the different states in the south, it has a 13% share in Tamil Nadu, 13% in Kerala and 5% each in Andhra Pradesh and Karnataka. In the south, it competes with local players such as India Cements and Ramco Cements and national players such as Holcim and UltraTech.

We expect DBEL’s cement volume in the south to clock double-digit growth over the next two years. While demand in Tamil Nadu and Kerala is stable, Andhra Pradesh will see a sharp increase due to the creation of the new state of Telangana last year. Andhra Pradesh has aggressive plans to build its capital city and several infrastructure projects. The housing market is also looking up in Telangana. Besides, incremental volume will come from the company’s new unit in Karnataka, which will also allow sales into Maharashtra. The strategic location of the plant gives it

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