Cement Sector Check - Ebitda Could Be Lower In Q4: IDBI Capital

IDBI Capital Report

Our interaction with cement dealers suggests that the cement price at all India level has decreased marginally by 1% month-on-month in February 2024. In the last four months, there has been weakness in the cement prices. And thus, Q4 FY24 average cement price is down 4.5% QoQ (i.e. Rs 350/tonne).

Though, volume is expected to increase by 8-10% YoY in Q4 FY24 but weakness in prices to impact Ebitda/tonne by Rs 60-70/tonne QoQ for the industry.

Region wise, price weakness is highest for East. Energy prices have remained weak in Q4 FY24 and this to have positive bearing on profitability in H1 FY25E.

Cement stock price performance is largely in-line with Nifty-50 in the last one month. Stock performance in mid cap has been better than large cap but given weakness in cement prices at dealer level, we expect large cap are better placed currently. And thus we retain our 'Buy' on ACC Ltd. and UltraTech Cement Ltd.

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