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Nirmal Bang Report
Q4 FY22 earnings of cement companies were characterised by controlled operating costs and better realisations, resulting in QoQ improvement in Ebitda/metric tonne.
Given the sharp uptick in international coal and petcoke prices, expectation was that the operating costs will increase even on QoQ basis, leading to pressure on margins.
But, reduction in various other cost items mitigated the impact of higher power and fuel costs. Demand growth remained dismal as overall volume was flat on YoY basis.
Ebitda margin for the sector (aggregate of 16 companies) was down 634 bps YoY and up 124 bps QoQ.
Key factors contributing to margin pressure were:
elevated coal and petcoke prices,
inability of the companies to pass on higher costs to consumers and
higher packing costs and inward freight on raw materials due to elevated crude oil prices.
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