Is a hike in cement prices round the corner?

Analysts at Anand Rathi said, “With a peak in Q2 FY2023, international coal prices declined 10% sequentially in Q3 FY2023 and 25-30% by March 2023.” Exiting prices are currently very low, while petroleum coke prices are flat.” Shares and Stock Brokers Ltd. in a report dated March 9.

Savings in fuel cost is likely to provide relief to cement companies, whose margins have come under pressure in the recent past. As a result, the industry’s focus has now shifted to price increases, which have been ineffective so far.

Dealer channel investigation by various brokers revealed that the price action in January and February was muted across sectors. Price increase efforts by cement companies failed due to intense competition. According to a recent channel investigation by Nirmal Bang Institutional Equities, prices have remained stable across India so far in March, barring a marginal increase in central and eastern regions. However, with demand picking up, thanks to government spending on infrastructure projects, analysts at Nirmal Bang expect prices to rise 5-10 per bag during March 10-16 due to 8-9% sequential improvement in demand in February.

For receipts outlook to improve, it is important that meaningful price increases take place and remain at a high level. But there’s a catch here. According to analysts at Anand Rathi, increased focus on increasing volumes to meet year-end targets in the month of March will keep a lid on upside in cement prices. So they are expecting a correction in prices from April. In this scenario, cost optimization and savings are the keys to outperform, said the March 9 Anand Rathi report.

A March 10 Nirmal Bang report said that even as investors await much-needed price action in cement stocks, higher OPC product mix is ​​expected to improve sector realization per tonne. Domestic brokerage houses expect a rise in 175-250 in Q4FY23 in Ebitda/Tonne for the cement companies under its coverage.