Cement Sector Update - Monsoon Setting In, Prices To Go Soft: IDBI Capital
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IDBI Capital Report
Our interaction with cement dealers across India suggest that an average cement price has increased by 1% month-on-month in June-2021 and thus Q1 FY22 average cement price is up 6% QoQ.
Cost has moved up too with imported coal is up 14% QoQ and freight index is up 4% QoQ in Q1 FY22.
On demand front, we are modeling in cement demand in Q1 FY22 to be lower by 25% versus Q4 FY21.
But despite lower volume, Ebitda/tonne is expected to improve on QoQ in Q1 FY22. This will be driven by higher realisation.
Historically realisation has been strong until monsoon and then it starts receding.
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