Cement Q1 Results Review - Temporal Dimensions Of Past, Present And Future: Nirmal Bang

Nirmal Bang Report

Key Points

• It is anticipated that overall cement consumption would increase by 9- 10% in FY24 while pricing will stay flat compared to FY23.

• At 93 million tonne, cement volumes in Q1 FY24 increased by 14% YoY. Overall volume was up by 10% YoY at ~380 million tonne in FY23. Demand from housing and infrastructure sectors as well as the low base of Q1 FY22, which was hit by the second Covid wave, were the main drivers of this rise. Volume in FY24 should increase by 9-10% to 415–420 million tonne.

• Q1 FY24 saw no change in average cement prices, which came in at Rs 370 per bag. Prices in FY23 were comparable to FY22 levels at Rs 375 per bag.

• Petcoke prices declined further, down by 47% YoY, in July 2023 while coal prices declined by 41% YoY and 7% month-on-month. This reduction in input costs, according to us, could aid in boosting operating margin, which is anticipated to rise by 230-270 bps to 16.3-16.7% in FY24.

• Further capacity additions in FY24 will add pressure to the pricing power.

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