Cement Q3 Results Preview - Pick-Up In Volumes, Easing Cost Pressure To Aid Margin Recovery: ICICI Direct
We expect the cement sector to report healthy sales volume growth in Q3 led by a favorable base, pick-up in construction activity.
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ICICI Direct Report
We expect the cement sector to report healthy sales volume growth in Q3 FY23 led by a favorable base, pick-up in construction activity post monsoon and festive season.
While cement prices have remained volatile during Q3, they are likely to stay higher by 5.1% YoY and 1.5% QoQ at all India level. Further, moderation in fuel prices and operating leverage would lead to some reduction in operating costs.
Overall, we expect, Ebitda per tonne to improve by Rs 211/tonne QoQ.
While an improvement in margins is expected to be visible from this quarter onwards, a sustainable correction in energy prices would be crucial for a further improvement in profitability given the limitations in price hikes.
Notwithstanding near-term challenges, the demand outlook is expected to remain strong, going forward, considering upturn in housing cycle and step-up in government spending towards infra projects in the run-up to upcoming general elections.
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