An extremely insightful talk by Abhay Baijal of Chambal Fertilizers on the ongoing Russia – Ukraine conflict and the emerging global scenario in commodities and its impact on fertilizers and food prices, inflation, government policy and so on. Click on the link below, his talk starts from 39:35 minutes onwards.
(Note: The slide heading erroneously mentions electric vehicle ecosystem etc. Please ignore)
This question for cement sector is well analysed here Cement Sector Preview | Bag of mixed fortunes; strong demand gets overshadowed by high operating costs
Lots of buzz around Holcim exiting India and selling it’s stake in Ambuja. Most acquisitions in India in near term have happened between US$100-130/t. However, all those were small units with no brand appeal. Ambuja is a once in life time opportunity. Currently stock is trading at US$169/t. Very unlikely deal will happen below US$200/t
Looks like Hindustan Zinc is available at a discount compared to the underlying commodity.
Cement industry is pressing the pedal on capacity additions with 80 Mil ton expected through FY24.
Govt’s impetus on infra & housing projects, Bharatmala projects, housing for all, rapid urbanization and rising rural income, interest rates on housing loans at historical low are some of the key drivers of increased demand.
Ambuja cement has disappointed in volume growth in the past but now, new capacity additions and cost improvement programs (I CAN and master supply agreement with ACC) are yielding results.
Current WHRS capacity is 6.5 MW and now ACEM plans to commission 54 MW capacity in HP, Chhattisgarh and Rajasthan. Current solar power capacity is 5.53 MW, now adding another 23.5 MW in Gujarat and Chhattisgarh. Other cost saving strategies include underground mining from Gare-Palma IV coal block, mining lease for long term limestone requirement.
A merger between the two companies would further lead to supply chain optimization and reduction in fixed costs. While other players have aggressively added capacities in the past, Ambuja has been lagging in this regard so a lot depends on the execution when it comes to 50 mtpa capacity guidance.
Earning power value: I calculated Ambuja’s value assuming-
i.e. adjusted earnings describe the sustainable level of cash flows that can be distributed to shareholders. it was trading near this price in March 2022.
Disc: Invested
Cap Goods - Quiet a few companies we track and own have all-time high order books. Significant order book is exports. I think exports will do very well. Domestic demand also coming.
Cement - Is a 2-3 year play. Cement demand will only improve from here. Valuations are favorable.
Just a view on the extent of the coal prices in international market. They are up by about 200% to the highest level of previous 10 years.
Can any one explain why the refinery stocks like Chennai petroleum, mangalore refinery Has given good appreciation in price?
From the news I could see increase in Singapore grm. Not sure about it.
Was trying to compare whether building a cement plant organically at US$90/t is cheaper or buying Ambuja from Holcim at US$200/t? Surprising results
IMO, stock price of Ambuja has significant upside potential, which should unravel in the next 6-8 weeks.
Would happy to understand if I am missing something here
Disc: Invested, and adding positions.
Reference link: Adani Leads The Race To Buy Ambuja And Acc With $13.5 Bn In Kitty | Mint. This is not a recommendation.
How is demand supply scenario in electric equipment,industrial equipment and compressor pumps
@jitenp , you’ve mentioned Capital Goods sectors having tail winds… cursory look and the sector seems so diverse… could you please detail on the sector… or any pointers would be helpful too… thanks 
There are a few major reasons why only reffinery but not marketting company’s like Chennai Petro and MRPL shares risen/rising.
1- These are only refinery companies and not a marketting companies (OMCs), so they have no burden related with lower marketting prices, like IOC, BPCL, HPCL or Reliance.
2- Rising crude prices given positive inventory valuation gains.
3- Due to Russia- Ukraine war few global refineries stopedproduction and alongwith higher crude prices Singapore GRM rising heavily.
4- Last and most important. Excise duty cut in Nov.21 by govt. Rs.10 per litre on diesel and Rs 5 per litre on Petrol has improved their Ebidta heavily. You can check it from their March 22 and Dec.21 qtrly results seeing Excise duty cost to revenue percentage.
In Chennai Petro this gave over 1000 crs extra Ebidta.
I belive saturday the 21 May 22 further excise duty cut should further boost their EBIDTA and PAT remarkably and June qtr’s GRM is also around 10USD higher than March Qtr, so very likely June qtr results can be better than March qtr.
Disc: I am holding both shares in my portfolio.
Does anyone has concall transcript or Audio of Chennai Petro.
Pls share.
Does anyone have any idea why Chennai Petro and MRPL Shares falling (Everyday lower freeze) just after Excise duty reduction on 21`st May 22.
Some mkt rumours says Govt is considering to announce windfall tax like U.K did, taxed by 25% on profits, if Crude prices go above certain level.
Here i want to say such duty can be put only on oil (crude oil) producing companies like ONGC and OIL, Reliance, Vedanta etc but refineries should not come into that bracket.
Pls let us know the reason of fall in share prices of these two stocks.
@jitenp , Texmaco and Titagarh Wagons. They both have garnered orders worth 4-5x their annual revenues. Trading at near book values. Mcap less than annual turnover. Sounds too good to be true… please guide on wagon manufacturers… and on rail expansion play in general…
Any idea about why these oil stocks are up: Chennai Petro +15%, MRPL 20% up today. Oil India +13% since last 2 session. In news:
Because expectations are that oil prices will remain elevated for a while.
