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ICICI Securities Report
The reason Tamil Nadu/Karnataka majors could afford to get aggressive is the underlying demand support led by infrastructure push by both Central and state governments.
Demand in Tamil Nadu grew 12-13% in FY23 and is expected to grow at ~15% in FY24. In Karnataka too, demand is expected to be up ~10% versus 7-8% witnessed in FY23.
Demand in the other southern states of Karnataka, Andhra Pradesh and Telangana too is expected to maintain double-digit growth. However, as per the expert we interacted with, pricing uncertainty is unlikely to die-down given continued aggression by players and the impact of upcoming capacities in the region.
The acquisition of Sanghi Industries India Ltd. by Ambuja Cement Ltd. may lead to additional supplies in the coastal markets of south India, hence a potential red flag if volumes are huge.
Overall, we believe, the situation still warrants a cautious view on the sector.
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