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Pain period likely over, cement makers set to deliver stronger in second half
The growth was the highest for Heidelberg Cement at 9 percent on-year, while that for UltraTech Cement stood at 5 percent. For H2FY23, experts expect the volume growth to remain robust in the range of 8-9 percent, driven by better demand on the back of higher government spending on infrastructure, low-cost and affordable housing, real estate demand, and demand emanating from the commercial and institutional segment. With the increasing trend in prices, as cement demand is normally better in H2 and softening in commodity prices, experts expect improvement in margins of the cement companies and expect EBITDA/tonne to be higher by Rs 250-Rs 300 from the current levels in the second half. “We feel that ambitious capacity additions by large players (led by Ultratech and Ambuja-ACC) of ~100 million tonnes (MT) over the next ~4 years (from current 500 MT national cement capacity as estimated by IBEF) are going to have substantial fixed costs in the medium term and may lead to over-capacity in the sector (and hence a fall in realisation per cement bag)”, said Abhimanyu Kasliwal, AVP, Choice Equity Broking. “ Source - Money Control
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