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Cement Sector Q3 Earnings Preview - Seasonal Weakness An Opportunity To Accumulate: ICICI Securities

Cement Sector Q3 Earnings Preview - Seasonal Weakness An Opportunity To Accumulate: ICICI Securities

<div class="paragraphs"><p>The shadow of site workers falls on wet cement as it is poured over reinforced steel during groundwork construction. (Photographer: Angel Navarrete/Bloomberg).</p></div>
The shadow of site workers falls on wet cement as it is poured over reinforced steel during groundwork construction. (Photographer: Angel Navarrete/Bloomberg).

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Companies under our coverage may see sharp ~20% YoY drop in Ebitda during Q3 FY22E owing to lower volumes and sharp costs increases. Volumes may decline 4% YoY while Ebitda/tonne may shrink 17% YoY (Rs 200/tonne) to ~Rs 980/tonne as realisation rise of 7% YoY (Rs 340/tonne) may fall short of the 14% YoY (Rs 540/tonne) cost increase.

On QoQ basis, realisations may remain flat while cost/tonne may rise 4% (Rs 170/tonne) resulting in 14% QoQ (Rs 170/tonne) fall in Ebtida/tonne.

With cost pressures receding, demand improving (YoY growth in December 2021) and prices expected to pick up in peak construction period of January - June 2022, any weakness in the stock prices may be used as an opportunity to accumulate, in our view.

East may see maximum price hikes on low base (Rs 50/bag likely from next week) in H1 CY22.

Click on the attachment to read the full report:

ICICI Securities Cement Sector Q3FY22 Preview.pdf

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