Indian Cement Sector Check - Large Players Show Resilience; Outlook Robust For H2: Systematix
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Systematix Research Report
In Q2 FY22, cement companies in our coverage universe reported a 12% YoY revenue growth driven by 6.2% growth in cement realisation and volume growth of 5.5%.
Cost inflation in coal/pet-coke/polypropylene plastic led to a 4.4% YoY/16.8% QoQ Ebitda decline.
Ebitda/tonne fell to Rs 1,222 versus Rs 1,348 YoY (down 9.4%) and Rs 1,460/tonne QoQ (down 16.3%).
Further, based on the Q2 results of 19 listed cement producers representing about 90% of the industry, we see a larger Ebitda/tonne drop (down 26.8% YoY) among mid-cap producers (15-25 million tonnes per annum players) while the drop for large-cap producers being relatively modest at down 5% YoY.
We believe bulk purchases (leading to competitive prices) of fuel coupled with better inventory management diluted the cost inflation.
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