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HDFC Securities Institutional Equities
We expect industry volume will grow by ~10% YoY in FY24. Input cost reduction should bottom out in Q3 FY24, in our view. Riding on recent price recovery and fuel cost cool-off, we estimate our coverage universe margin will recover by ~Rs 210/75 per metric tonne YoY in FY24/FY25 to Rs 1,020/1,095 per mt respectively.
If the government were to reduce diesel prices by ~Rs 10/litre ahead of the general elections, this could further reduce industry opex by ~Rs 50/mt, boosting the industry's profit outlook (we haven't built this in our FY25 estimates).
While we have lowered our FY25/26E volume estimates by ~1% each, our aggregate Ebitda estimate remains unchanged, owing to better pricing offsetting the impact.
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