The overall demand for Cement in the country remains strong led by government infrastructure spending. There was some impact of festival season, state elections and region-specific challenges, such as lower sand availability in Odisha and Nagpur, temporary impact on construction due to pollution curbs in Delhi National Capital Region (NCR) along with the impact of cyclone on Telangana. As a result, the industry expects some moderation in growth annually.
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Analysts at Elara Securities India Pvt Ltd, expect companies in their coverage universe to report volume growth of 6% YoY and 3% sequentially. The outsiders are likely to be JK Cement on the positive side and Nuvoco Vistas Corporation on the negative side s through Elara. Among large caps, Shree Cement should lead in year-on-year volume growth while JK Cement among midcaps.
Analysts at Motilal Oswal Financial Services estimate 7% YoY volume growth for their coverage universe with industry capacity utilization of ~80%. They said Cement’s volume growth moderated during the quarter due to weak demand in rural and residential segments as well as some regional headwinds such as state elections, floods and construction bans.
The cement companies took adequate prices in the September quarter and some prices in the beginning of the December quarter Although there was some moderation in prices later, however realizations for the companies are likely to remain higher in the long term and sequentially.
Analysts at Elara expect the realization of our coverage universe to rise 2% YoY and 2% sequentially. Cement companies with higher exposure to East and South India should report sharper improvement in realizations.
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The prices were led by eastern region while West India also saw good prices.
On the profit front Cement manufacturers will also benefit from lower operating costs, driven by lower fuel prices and internal cost-saving measures. Analysts at Elara expect operating cost per tonne to fall 4% yoy and 2% sequentially. Overall, they expect EBbitda per tonne to jump 43% YoY and 22% sequentially led by steady volume, healthy realization and falling operating cost. Those at MOFSL expect average Ebitda per tonne to increase 47% year-on-year and 26% sequentially to ₹1119, benefiting from price improvement and cost reduction. Birla Corporation and JK Cement are estimated to report robust year-on-year growth in Ebitda on a benign basis from last year.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions
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Published: 10 Jan 2024, 16:48 IST