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Systematix Research Report
Cement companies under our coverage are likely to face margin pressure due to-
subdued demand,
limited price hikes, and
high energy costs (up 28% YoY/ up 2% QoQ).
There is, however, a marginal respite in logistics costs. Sales volume in cement are likely to be higher by 9.6% YoY (on a low base effect) and lower by 6.4% QoQ due to seasonality.
Channel checks indicate that volumes were affected by-
heavy rains,
sluggish demand ahead of festive season,
labour issues in some states,
sand mining issues, and
a general slowdown in new projects.
For Q2 FY23E, we estimate revenue growth of 12.6% YoY/down 10% QoQ, driven by up 9.6% YoY/down 6.4% QoQ increase in volume and up 2.8% YoY/ down 3.8% QoQ in realisation (net sales realisation) for stocks within our coverage.
Ebitda/tonne during Q2 could remain weak and lower by 41.4% YoY due to high fuel costs, in line with Q4 FY22 and Q1 FY23 trends. Sustained higher power and fuel costs (petcoke, international coal and domestic e-auction coal) are unlikely to provide relief, in our view.
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