Motilal Oswal: Cement Sector Check - CCI Investigation Sours Near-Term Price Outlook
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Motilal Oswal Report
The Competition Commission of India has initiated an investigation against many cement companies for alleged violations under Section 3 of the Competition Act, 2002, which deals with the anti-competitive agreement or cartels.
Several offices of the companies have been raided since yesterday as part of this inquiry.
While we remain watchful of how this event unfolds, we believe this would sour near-term sentiment on the sector and possibly slow any price hikes expected in the upcoming busy season from January–March.
We have, however, built in only a 1% QoQ price hike in Q4 FY21 and 1% YoY hike in FY22, limiting the downside to our earnings models.
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