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HDFC Securities Institutional Equities
Cement companies are expected to report healthy volume growth but weaker profitability in the June quarter as rising fuel, packaging and logistics costs offset modest improvements in pricing, according to HDFC Securities.
The brokerage expects industry cement demand to grow around 6-7% YoY during Q1 FY27, supported by better offtake in June following a delayed monsoon.
The Middle east turmoil has driven up coal, pet coke consumption prices in Q1 FY27E and these are expected to peak in Q2 FY27E, highlights the brokerage.
The brokerage remains positive on long-term demand, which should also drive realisation. This along with the expected cost cool-off should lead to margin rebound H2 FY27E onward.
Despite near-term challenges, HDFC Securities remains constructive on the sector's medium- to long-term outlook, driven by infrastructure spending, housing demand and capacity utilisation improvements. It expects the companies under its coverage to deliver an average volume CAGR of around 8.5% between FY26 and FY28.
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