Cement Sector Outlook - Losing The Plot: ICICI Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .ICICI Securities Report.Pricing power is crucial in the commodity business and the Indian cement sector is certainly losing the plot on that front. Elevated competitive intensity across regions, has prevented margin-accretive price hikes, despite: robust demand (Q4 FY23E prices slipped ~1% QoQ notwithstanding peak season volume surge of ~10% YoY), and more than 400 basis points jump in industry clinker utilisation to a healthy 77% (89% ex-South) in FY23E. Industry’s inability to pass on the unprecedented fuel cost surge (in H1 FY23) too was a glaring instance of weak pricing power. While current capacity addition pipeline offers limited scope for further improvement in utilisations until FY25E, Adani Cement’s recently reiterated resolve to double its capacity by FY28 (which may trigger a race for capacity share) may keep competitive intensity high for an extended period. Of course, the recent fall in global fuel cost offers relief. However, pricing trends in recent years (wherein only Q1 witnesses hikes followed by sustained weakness in rest of the fiscal) offers limited comfort on sharp margin expansion. .Click on the attachment to read the full report:.Cement Channel Check - Sustaining Price Hikes Remains The Prime Issue: Anand Rathi.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Cement Sector Outlook - Losing The Plot: ICICI Securities

Pricing power is crucial in the commodity business and the Indian cement sector is certainly losing the plot on that front.

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