The cement sector in the third quarter (Q3FY24) is expected to have strong demand with low double-digit volume growth. Overall, as per analysts, FY24 demand will be supported by public as well as private capital expenditure ahead of pre-election spending and recovery in the rural segment.

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Analysts predict earnings before interest, tax, depreciation, and amortisation (EBITDA) to improve in Q3 from 40 per cent to 48 per cent year-on-year (YoY). Also, EBITDA margins will improve due to low-cost inventory and the easing of fuel costs. Overall, cement companies are likely to post strong YoY growth in terms of both absolute EBITDA and EBITDA per tonne in 3QFY24F on the back of improved realisation and lower input costs.

Some relief in imported fuel prices from their recent highs is likely to benefit companies in the cement industry. Further, analysts expect mid-low-tier players to decline and believe the best course of action for them is to merge with top-tier players. These companies are expected to chase inorganic opportunities more aggressively than in the past. 

Meanwhile, the average cement price is likely to rise in Q3 at the end of January 2024 by Rs 10 to 20 per bag, but with the general elections around the corner, many price hikes across the regions are unlikely.

According to analysts, the average cement price has increased quarter-on-quarter (QoQ) for Q3 by Rs 140 per tonne. Region-wise, the maximum hike is seen in the South and the East at Rs 270 per tonne and Rs 410 per tonne, respectively. Pan India, the average price of cement has improved by 2 to 3 per cent QoQ compared to the price in 2QFY24.

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