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ICICI Securities Report
Very rarely do cement prices plunge QoQ in Q4 (in fact they tend to rise) given the peak construction activity. However, Q4 FY24 has been an unusual ‘busy season' with prices likely to have plunged more than 5% QoQ even as industry volumes made a decent come back (estimated to have risen 6-7% YoY versus ~3-4% growth in Q3 FY24).
The price weakness (March 2024 exit being more than 7% lower versus Q3 FY24) screams of elevated competitive intensity in the sector and has set the stage for price recovery in April 2024 sans which there can be significant earnings cut.
However, pricing volatility may remain the order of the day given the huge capacity addition amidst industry-wide race for capacity share.
We prefer to remain Neutral on the sector.
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