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IDBI Capital Report
Our interaction with cement dealers suggests that average cement price at all India level has decreased by 1% month-on-month in August 2022. Cement prices are soft from the last last months due to monsoon and demand.
On the costs, energy prices continue to remain volatile. Imported coal did fall below $300/tonne at the start of Aug-22 but has again spurted and currently stands elevated at $342/tonne (6000 kcal). And depreciating rupee has also added up to overall cost of coal imports. Approaching winters and overall geopolitical crises is leading to this volatility. In base case scenario we expect energy prices to peak in Q2 FY23.
However, if high energy prices sustain then price hikes will be required to sustain Ebitda/tonne levels. In the last one month, mid and small cap cement stocks are up ~10% plus and large cap stock performance is largely flattish.
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