Muted volume growth and continuing cost pressures have put a further squeeze on the earnings of Indian cement companies with a disappointing 15 per cent YoY fall in EBITDA/t in Q4FY13. Among the large companies, only HeidelbergCement managed to report an improvement while UltraTech Cement, Dalmia Cement and Prism Cement all reported flat EBITDA/t during the quarter.

Volumes declined one per cent YoY over the same period, significantly below the government’s recently revised 7.3 per cent industry production growth. OCL India, Dalmia cement, HeidelbergCement, India Cements Ltd, Sagar Cement and Birla Corp all reported positive volume growth during the quarter but this was primarily driven by consolidation activity, new capacity commissioning or a revival in regional demand.

Operational costs continue to rise, up 9.8 per cent YoY, compared to a 5.7 per cent increase in December 2012. Weak demand, coupled with newly-commissioned capacities, is keeping up the pressure on cement prices with a further hike of INR20-25/bag expected in the immediate future. Despite this, investors remain hopeful of an improvement in 2HFY14 on the back of increased demand following the general election and a better pricing environment.