Cement sector needs lady luck to smile on prices
Subscribe to enjoy similar stories. The Indian cement sector is expected to perform better in the second half of FY25 (H2FY25) compared to the sluggish first half, particularly in terms of demand and prices. Two months into H2, there are positive developments regarding prices that have been stagnant recently.
Pan-India cement prices in the trade segment rose by ₹8 month-on-month in November to ₹342 per bag, showed a recent dealers’ channel check by Nomura Global Markets Research. Trade segment is where cement is sold by companies to dealers. The price hike was led by an increase of ₹23 per bag and ₹14 per bag in the east and north regions, respectively.
Central and south witnessed a modest price hike of ₹2-3 per bag. Still, pan-India average prices in Q3FY25 have so far risen by a mere ₹2 per bag sequentially. Recall that in H1FY25, the cement industry experienced muted demand growth, pricing pressure, and higher competitive intensity, leading to weaker-than-expected earnings performance.
In the recently concluded September quarter, volumes were likely flat-to-negative year-on-year for the cement industry, and prices fell by around 2% sequentially, said Nuvama Research report on 14 November. For 15 major cement companies, aggregate Ebitda per tonne plunged around 25% sequentially to ₹614due to tepid demand impacting operating deleverage and a weak pricing environment, it added. Also Read: Is India’s cement sector finally turning a corner? Unsurprisingly, cement manufacturers are rooting for demand revival in H2FY25 aided by increased government spending on infrastructure projects.
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