Cement Sector Check - Q3 Price Remains Up, Consensus Upgrading Ebitda: IDBI Capital

IDBI Capital Report

Our interaction with cement dealers suggests that the cement price at all India level has marginally decreased by 1% month-on-month in November 2023. After factoring Nov-23 weakness, Q3 FY24 avg cement price (i.e. Oct-23 and Nov-23) is still up 2.5% QoQ (i.e. Rs 200/tonne) with South prices are up ~4% and East is up 7% so far.

Energy prices have decreased in Nov-23 given weakness in crude, with imported coal (RB index 6000 kcal) is down 11% (~Rs 250/tonne) versus Oct-23.

Price uptick and costs weakness is positive for cement companies and we expect further upgrade in the cement stocks Ebitda.

In the last two quarters we have seen consensus has upgraded cement Ebitda (top 14 cement players) for FY24E and FY25E by 1% and 2% respectively.

And importantly, this upgrade has come after weak four quarters of FY23 which was impacted from costs. We prefer ACC Ltd. and Ultratech Ltd.

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