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Systematix Research Report
We expect Q3 FY23 earnings recovery momentum of cement companies within our coverage to continue in Q4 FY23E, primarily driven by higher volumes, lower energy costs, and operating leverage benefits.
Though March quarter was primarily volume driven, channel checks suggest demand during the month was weak compared to that seen during January-February 2023, mainly because of-
unseasonal rains,
festival and marriage season in some regions,
labour and sand mining issues,
extreme weather conditions in Jan-23 (cold) and March 2023 (summer),
slowdown in government projects in certain states, and
rise in interest rate.
Notwithstanding these aberrations, we estimate ~10% YoY and 13.3% QoQ volume growth within our cement universe for Q4 FY23.
Our universe is estimated to report Q4 revenue growth of 14.1% YoY/ 13.8% QoQ, with Ebitda slated to improve by 9% YoY/ 42.5% QoQ and profit after tax to likely witness 15.9% YoY decline but 72.6% QoQ growth, supported by higher volumes, easing input costs and operating leverage benefits, despite lower realisations (up 3.8% YoY/ flattish QoQ). Ebitda/tonne is estimated to improve 25.8% QoQ (flattish YoY) to Rs 941 from Rs 750 in Q3 FY23.
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