Cement Sector Q2 Results Preview - Benefiting From Higher Volume And Lower Power, Fuel Cost: Systematix

Systematix Research Report

We forecast a healthy 13.3% YoY revenue growth for the cement companies under our coverage universe led by 12.8% YoY increase in volume and a marginal 0.5% rise in realisation.

Our channel check indicates a strong demand in Eastern and Central region while weaker demand in Southern part of India. Even though September saw multiple price hikes led by the Eastern region, average cement prices for the quarter are likely to increase only marginally in Q2 FY24.

Also, Ebitda is likely to benefit from lower power and fuel costs due to the lag effect while recent surge in coal and petcoke prices are likely to impact margins negatively from Q3 FY24 onwards. Overall, Ebitda/tonne is likely to improve by 50% for our coverage universe to Rs 932.

We forecast volume/revenue/Ebitda/profit after tax growth of 12.8% / 13.3% /68.7%/105% during Q2 FY24.

Our preferred pick remains Ultratech Cement Ltd. and ACC Ltd. in the sector.

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