Cement prices are likely to decline during the second quarter of the current financial year by Rs 6 per bag, according to a report by Kotak Securities.
Pan India cement prices saw a marginal decline of Rs 3 per bag in August compared to the last month, led by West India (Rs 10 per bag), followed by North and South (Rs 5 per bag each), said the report.
Earnings of North-based companies such as JK Lakshmi, JK Cement and Shree Cement may be at risk as cement prices in that region have continued to trend down since the price increase in April 2017, Kotak Securities said. The brokerage sees “weak headline numbers for the second quarter of the financial year 2017-18”.
Volume Trends Disappoint
The report stated that the cement volumes fell 5.8 percent in June, after a 11.6 percent decline in on a yearly basis during the last quarter of the previous financial year, impacted by both demonetisation and rollout of the Goods and Services Tax.
Companies such as ACC (+10 percent) and Shree Cement (+14 percent) reported strong volume growth on a year-on-year basis but UltraTech's volumes disappointed in during the first quarter, Kotak Securities said.
Besides this, cost-side pressures continue with pet-coke prices continuing to increase in May reaching $100 per tonne from $88 per tonne in March this year.
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