Cement Sector Check - Input Costs Softens, But Price Hikes Remains Key To Profitability: Nirmal Bang

Nirmal Bang Report

Cement demand recovered in November 2022 on a low base while Oct was dull due to the festive season. But Dec-22 is expected to be in-line with last year, which was a good month.

In Q3 FY23, increase in prices by Rs 20/bag across regions has been absorbed.

Even though input costs have been softening, the last few quarters have been difficult to navigate for the cement industry due to incessant cost inflation.

Also, demand has been muted, which has made it difficult for players to take price hikes. Companies have tried to take some price hikes in bits and pieces but the same has not been successful.

Q3 FY23 is likely to be better and with more price hikes in Dec-22, companies would be able to absorb 60-70% of the spike in costs. 

Companies are consciously making efforts to manage their costs through direct dispatches, less warehousing, tweaking rail/road dynamics and increasing the usage of blended cement.

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