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Cement Sector Q3 Preview - Steep Fall In Earnings Due To Higher Costs: Prabhudas Lilladher

Cement Sector Q3 Preview - Steep Fall In Earnings Due To Higher Costs: Prabhudas Lilladher

<div class="paragraphs"><p>Concrete is poured from a  truck at a construction site. (Photographer: Susana Gonzalez/Bloomberg).</p></div>
Concrete is poured from a truck at a construction site. (Photographer: Susana Gonzalez/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.

Prabhudas Lilladher Report

Ebitda of our cement coverage universe is expected to fall by 17% YoY. The key driver for fall is sharp contraction in margins. Volumes would fall by 3.4% YoY on back of subdued demand in East, Central and South regions.

Realisations are expected to increase by 7% YoY/Rs 355/tonne. Impacted by steep increase in coal, packaging and freight cost, overall cost is expected to increase by 14% YoY/Rs 535/tonne. This would result in contraction of Ebitda/tonne of our cement coverage universe by 15% YoY/Rs 175 at Rs 1,000.

We believe that outlook on sector’s earnings growth with an estimated compound annual growth rate of 8% (largely driven by volume growth) in FY22-FY24E looks unattractive due to high margin base and continued cost headwinds.

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Prabhudas Lilladher Cement Sector Q3FY22 Earnings Preview.pdf

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