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Nirmal Bang Report
The Q2 FY23 earnings of cement companies were characterised by the double whammy of higher costs and weaker realisations. Hence, the overall impact on Ebitda/million tonne of the sector was more severe than expected.
Most coverage companies reported their lowest ever Ebitda/million tonne. Besides our coverage stocks, India Cements Ltd. and Sanghi Industries Ltd. reported a loss on absolute Ebitda level.
Price hikes were meagre, owing to increased competition and an extended monsoon in some regions, which affected profitability.
Most companies have guided that costs have likely peaked out in Q2 FY23 given the recent decline in various commodity prices like crude/coal.
However, coal/petcoke prices have been volatile, and it would be a key monitorable going into H2 FY23.
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