Indian cement manufacturers are expected to report single-digit volume growth for the third quarter of FY24-25, while profitability is likely to decline due to continued pricing weakness. Analysts anticipate a drop in EBITDA as well as profit after tax (PAT) for most companies in the sector.
According to a Bloomberg consensus, the absence of significant price hikes during the quarter, coupled with subdued realisations, has impacted margins on a YoY basis. While a price hike was implemented towards the end of the quarter, it was insufficient to offset earlier pricing pressures.
Nuvama analysts estimate an 18 per cent YoY decline in EBITDA for cement firms under their coverage, attributing this to a weak pricing environment and elevated competition. Yes Securities echoed this sentiment, highlighting that prolonged monsoons, the festival season and delayed government fund releases contributed to tepid growth in the sector.
The top four cement makers — UltraTech Cement, Ambuja Cements, Dalmia Cement and Shree Cement — are expected to report a YoY decline in EBITDA per tonne. Meanwhile, industry-wide demand growth is projected at 6-8 per cent for the quarter. Nuvama noted that Ambuja Cements could see a demand jump of 20 per cent, aided by recent acquisitions.
Despite sequential recovery in margins, analysts at Kotak Securities and other brokerages forecast continued earnings downgrades for the sector, citing ongoing volatility in pricing and lower-than-expected volume growth in the 9MFY24-25. These challenges are expected to weigh on the upcoming results season.
