This indicator shows why cement companies have a rough road ahead

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₹50 a bag in August from the normal ₹30-40 a bag. In fact, it was around ₹80 a bag in some parts of India, indicating weak demand from the infrastructure segment, the report added. The individual home building segment is the biggest driver of cement demand in India, estimated to contribute over 50%, followed by the infrastructure segment.

Also read: Hunky-dory equities? Look before you leap Due to relatively better margins and consistency in demand, large companies generally prefer to focus on trade sales. In a non-trade sale, companies tend to save on several costs such as packaging and freight, which gives them room to offer discounts and consequently boost volumes. Clearly, in the current scenario, where volumes are being prioritised over realisations, the non-trade segment is in focus.

According to a Nirmal Bang Institutional Equities report dated 31 August, there has been a 3-4% industry-wide shift from trade to non-trade segment. This change is more pronounced for companies that are rapidly expanding or commissioning capacities. After all, gaining market share via the trade sales typically takes longer.

“This shift has led to a decrease in overall weighted average realisations for the cement industry," the report added. Also read: Aadhar Housing Finance may continue to outpace industry growth The realisations of Shree Cement Ltd took a beating in Q1FY25, falling more than analysts expected. One of the reasons for this was an increased proportion of non-trade sales during the quarter.