Cement prices are at a multi-year low, and there’s more earnings pain ahead
IRCTC’s journey can be pleasant if non-convenience fee surprises At an all-India level, the average cement price fell around 3% month-on-month in July to five-year low of ₹313 per bag, according to IIFL Securities Ltd. One cement bag weighs 50 kilograms. Cement prices have fallen further in August in southern markets – by ₹10-15 a bag – while prices are steady in other markets, said the IIFL report dated 9 August.
After hitting a multi-month high in October 2023, cement prices have been going downhill. Attempts to hike prices in April 2024 failed and had to be rolled back owing to subdued demand. As things stand, the demand-supply mismatch could cause the sector’s realisations to fall further sequentially in Q2FY25.
The impact may be accentuated for companies that have exposure to East and South India, where prices have fallen more than in other regions. Shree Cement Ltd, which has meaningful exposure to the East and North India markets, said in its Q1FY25 earnings call that prices were likely to remain weak in Q2. With a spate of acquisitions and organic capacity additions by large cement makers, the pace of consolidation has accelerated in the recent past.
In the most recent notable deal, Aditya Birla-led UltraTech Cement Ltd acquired a majority stake in south-focused The India Cements Ltd. Competitor Ambuja Cements Ltd also has completed its acquisition of Penna Cement Industries Ltd. Also read: Hero MotoCorp needs 125cc to stay in the fast lane Management commentaries of various companies suggest that previously announced capacity expansions are progressing well and are expected to begin operations on schedule.
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