₹355, lower than ₹358 in previous quarter and ₹365 a year ago, as per Motilal Oswal Financial Services data. According to analysts, companies are chasing volumes amid strong demand, and the quest for market share is putting pressure on prices. Analysts expect no significant improvement in per-tonne profitability of cement manufacturers, even though lower energy costs cushion operating profits.

“Margin recovery is expected to be tepid as higher volumes have come at expense of marginally lower realizations," said Mangesh Bhadang, senior vice-president, Centrum Institutional Research. Lower power and fuel costs, Bhadang said, are likely to offer some respite through lower operating costs, but weaker realizations are expected to limit the Ebitda per tonne expansion. He expects cement companies under Centrum’s coverage to deliver a strong 15% on-year growth in volumes in Q1 FY24, driven by delayed monsoon and higher government spending.

Analysts at UBS Research, who have a negative view on the sector, too, have raised concerns about cement prices. UBS analysts said in a report that despite strong demand and high utilization, prices were flat in Q1 FY24, in what is normally a strong quarter for price hikes. Pricing is where they see big negative delta in the medium term, as competition is likely to intensify with new capacities coming up.

Meanwhile, declining energy costs remain positive and will mitigate some impact of weak realizations. However, benefits of a decline in prices such as those of pet coke or thermal coal will be felt gradually and over a few quarters, said analysts. Q4 FY23 results commentaries by most companies showed that benefits of low spot fuel prices will accrue by Q2 and Q3 FY24, analysts said.