Price hikes in East to benefit select cement makers in Q2FY24

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₹404, which is a whopping 21% jump on a month-on-month basis, shows data from Nomura Financial Advisory and Securities (India). One cement bag weighs 50 kg. Thus, for Q2, the East is seen leading with a 1.5% rise in prices sequentially.

“Our channel checks suggest that the majority of the earlier announced hikes has been absorbed in the region despite weaker demand," said the Nomura report dated 11 September. In the trade segment, cement is sold by the manufacturer to the dealers, who in turn sell to the consumers. Now, it remains to be seen if prices are partially rolled-back given the upcoming festival season and the higher competitive intensity in the region.

Nonetheless, the jump in prices in the East should aid cement prices at an all-India level and could translate into hikes in other regions in the remainder of the month. Further, companies with exposure to the eastern region such as ACC Ltd, Ambuja Cements Ltd, Shree Cement Ltd, Dalmia Bharat Ltd and Nuvoco Vistas Corp. Ltd are poised to get some edge over peers in other regions such as the south, where prices continue to be particularly weak.

“Our interactions with dealers suggests that out of the cumulative ₹70-75/bag price hike in the East, even if ₹15-20 price hike is absorbed, then companies will sail through in Q2FY24," said Mangesh Bhadang, senior vice-president, Centrum Broking Ltd. “In case there is a partial roll back of prices, since this is an unusual season to hike, companies having exposure to east could see higher realizations growth than competitors in other regions," he added. Meanwhile, investors in cement stocks need to monitor the uptick in imported prices of key inputs such as petroleum coke and coal in the backdrop of recent surge in global