Cement companies, which reported a decline in profit growth in the September quarter, may see marginal improvement in the next three months on account of a slight pick-up in demand though prices will continue to remain under pressure, say analysts.
Net profit of ACC, the largest cement manufacturer, plunged 51 per cent to Rs 118.9 crore in the September quarter from Rs 241.96 crore year-ago, while group company Ambuja Cements reported a 45.4 per cent drop in stand-alone net profit to Rs 165.97 crore from Rs 303.97 crore.
UltraTech Cement from the Aditya Birla Group stable saw its net income plunge 52 per cent in the quarter from Rs 550 crore to Rs 264 crore.
JK Lakshmi's net profit for the quarter dipped 80 per cent to Rs 10.3 crore from over Rs 51 crore year ago.
All the companies have attributed the dip to sluggish market conditions mainly due to prolonged monsoons which led to delay in construction activity and lower price realisation.
"Cement prices fell by Rs 10-15 per bag in October after a steep rise in September. Last month, we saw a sharp increase in despatches on account of strong stocking led demand in anticipation of seasonally strong demand and prices in October.
"We expect prices to remain under pressure during the quarter due to festive season and calendar year-end discounts," broking firm Prabhudas Lilladher said in a report.
V Srinivasan, an analyst at Angel Broking said, "We may see the trend continuing in the third quarter as well though margins may improve, but marginally. I also don't see any major pick-up in demand, mainly because of the slowdown in construction activity. The scenario can improve if some of the major projects get on track."
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