According to brokerage firm Emkay Global, cement Companies have announced a hike in prices by Rs 15-25 per bag in the South ₹10-15/bag month-on-month (MoM) in other regions in September to prevent further fall in prices. The rise in prices is expected to be absorbed in the second half with improved demand and rising utilization levels.
So far in Q2FY22, the average all-India prices are likely to decline by 3% QoQ. Prices declined 1-2% QoQ in the North and Central markets, 3% in the West and 4-6% in the South and East regions. The brokerage firm said in a note that historically, cement prices have seasonally corrected at 2-3% QoQ in the second quarter of the fiscal.
“Input cost inflation and seasonal correction in cement prices should keep margins under pressure in the near term. However, margins are likely to pick up in the second half of FY22 with improved demand/prices.”
Emkay Global maintains a positive outlook on the cement sector based on strong earnings compounding and a structural ROIC reset, medium-term demand growth visibility and calibrated supply additions. Its top stock picks UltraTech, Shree Cement and Ambuja Cement.
The channel investigation conducted by Emkay shows that the average all India prices have declined by 3% MoM in August 2021. The decline in prices was mainly due to a 6% MoM fall in the former, while prices fell in the range of 2 to 2 in other regions. 3% MoM in 21st August. On a year-on-year basis, prices were broadly flat in the North, West and Central regions, but they fell 2-3% in the East and South regions, the brokerage note added.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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