Cement Sector Check - Lackluster Demand; Infrastructure Driving Growth: Nirmal Bang

Nirmal Bang Report

We interacted with cement dealers across the country to assess demand and pricing trends. Overall demand from the exit of September 2022 has been weak. It was impacted in Oct-22 due to an extended monsoon and labor shortages (owing to festivities and holidays).

Dec-22 has seen some positive movement compared to Oct-22 and Nov-22, owing to increased infrastructure development activities. Companies hiked prices in some pockets of India in Oct-22 and Nov-22 and expect another hike towards the end of Q3 FY23.

In terms of demand, Q3 FY23 so far has been below dealers’ expectations, but with cost pressures expected to ease in the coming quarters for the industry and margins bottoming out in Q2 FY23, higher exit of cement prices and pick-up in construction activities would pave the way for a relatively better Q3 FY23.

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