Cement Sector Q1 Results Preview - Lower Ebitda Growth Despite Robust Volume Growth: Systematix

Systematix Research Report

Revenue growth within our coverage universe is expected to continue the growth momentum with 12.9% YoY growth largely led by higher volumes.

Volume is expected to grow at a healthy 16.3% YoY. Though lower prices are expected to keep a muted growth at the Ebitda level as net realisation is estimated to drop 3% YoY (-0.7%% QoQ).

Power and fuel expenses are expected to come down by 11% YoY/2.7% QoQ which is likely to come down further in a couple of quarters due to the lag effect. Though the Ebitda of our coverage universe increases by 6.2%, propelled by higher volumes. Ebitda/tonne declines 8.8% YoY to Rs 951/million tonne as lower fuel costs would be more than offset by higher raw material cost.

Except for Ambuja Cement Ltd. and ACC Ltd., other cement companies under our coverage universe are expected to report double-digit volume growth where maximum growth is expected to come from Ramco Cement Ltd.

Stringent competition and huge capacity built-up amid weak pricing power may negate the positive impact of lower energy prices in the near term.

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