Cement Channel Checks - Aggressive Volume Push, A Headwind To Prices: Yes Securities

Yes Securities Report

For August 2023, our channel check hints mid to high single digit volume growth YoY, while all India weighted average price moderated 1% month-on-month in August 2023 and 2% as compared to average Q1 FY24 prices.

In Aug-23, three-month trailing blended fuel cost corrected to Rs 1.5 per kilo cal/kg vis-a-vis ~Rs 2.16 per kcal/kg in Q1 FY24.

We believe the incremental effect of easing costs to take industry Ebitda towards +Rs 1000/tonne in FY24E, despite muted net sales realisation.

Blended spot fuel cost (pet coke and imported coal) increased by +10-15% month-on-month in Aug-23 will not derail the power and fuel cost reduction in near-term due to inventory management.

We reiterate our 'positive' stance on the sector guided by robust demand and easing costs. Our top picks are UltraTech Cement Ltd., Dalmia Bharat Ltd., Sagar Cements Ltd. and Orient Cement Ltd.

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