Cement Sector Check - Price Hikes Announced In June 2024; Demand Should Support: Motilal Oswal

Motilal Oswal Report

Our channel checks suggest that the all-India average cement price (trade) was flat month-over-month in May 2024. However, price hikes of Rs 8-10/bag have been announced across regions in June 2024, after several failed attempts. Further, after a muted growth in April 2024, cement demand improved MoM in May 2024. We estimate cement volume to grow ~5-6% MoM in May 2024, driven by the housing and infrastructure segments.

Considering the recent price hike, the average cement price has been up ~3% MoM in June 2024. Conversely, the all-India average cement price in Q1 FY25 (to date) is estimated to be flat on a sequential basis.

Domestic petcoke price declined 6% MoM to Rs 12,439/tonne in June 2024 and imported petcoke price was down ~3% MoM to $ 107/tonne (on a spot basis). However, imported coal (South African) was flat MoM at $109/tonne. Based on spot prices, consumption costs stood at Rs 1.28/Kcal for imported petcoke and Rs 1.63/Kcal for imported coal.

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