Cement Sector Q2 Earnings Preview - Margins Shrunk Due To Higher Costs: Prabhudas Lilladher
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Prabhudas Lilladher Report
Ebitda of our cement coverage universe is expected to fall by 2% YoY due to margin contraction.
Volumes would grow by 4% YoY on back of growth across the regions except East.
Realisations are expected to increase by 3.5% YoY/Rs 165/tonne (down 1.7% QoQ/Rs 90/tonne).
Impacted by steep increase in coal, packaging and freight cost, cost/tonne is expected to increase by 8.7% YoY/Rs 325/tonne (up 4% QoQ/Rs 155/tonne) which would result in contraction of Ebitda/tonne by 6% YoY at Rs 1,195.
We believe cement stocks will remain under pressure in the near term given the -
slow pace of price hikes,
unabated rise in coal cost and
high earnings base.
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