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