Q3 woes: Cement companies may face earnings downgrades again
Cement producers are likely to record net profit declines in the December quarter, spurring another round of earnings downgrades, offsetting the recent momentum in sales volume and prices.
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Cement makers' revenues are expected to remain flat from a year earlier in the December quarter despite a 7-8% increase in sales volumes, according to analyst estimates. While earnings before interest, tax, depreciation and amortisation (Ebitda) for these companies are seen falling 20-30% year-on-year, profit is likely to decline by as much as 30-60% for some, the estimates showed.
«While soft power/fuel prices are positive, an earnings downgrade for FY25E-26E is likely on the cards considering the volatile pricing environment and lower-than-expected volume growth in 9mFY25,» said Nuvama Institutional Equities.
Cement producers faced a weak fiscal first half with volume growth falling to low single digits. While volumes generally tend to moderate during election years, companies got an additional hit from extreme weather conditions and intense price pressures.
Cement prices remain 8-10% lower from the year earlier despite recent price hikes.
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