Cement sector set for 30–80% profit surge
Mumbai : Cement producers are expected to report 30-80% rise in profits for the June quarter, helped by an improvement in both prices and volumes. Notably, companies having greater exposure to East and South India will see a sharper improvement in profits given the comparatively steeper price hikes in these regions, analysts said.Prices of the key building raw material rose 3% in the three months ended June—the first year-on-year increase in six quarters. On a sequential basis, prices gained for the third consecutive quarter.At Rs 377 per bag, average cement prices for the June quarter is also the highest since the December quarter of 2023. Analysts noted that certain planned price hikes had to be rolled back due to the early onset of monsoon rains this year. 'Pricing remains a key monitorable going ahead as the indust ry steps into the seasonally weak monsoon quarter,' said Nuvama Institutional Equities.Earlier-than-expected monsoons also restricted overall volume growth for the industry to 4-5% onyear in the June quarter. Analysts had predicted enhanced cement take-off, considering sluggish demand in the year-earlier quarter due to the general election.
Nuvoco Vistas Corp, a dominant cement producer in east India, is expected to score the sharpest profit increase. In addition to single-digit growth in volumes to around 5 million tonnes, Nuvoco's earnings before interest, tax, depreciation and amortisation (Ebitda) per tonne is seen rising by a third, according to analysts.
Shree Cement, India's third-largest by capacity, is expected to report a 50-80% surge in quarterly net profit, while market leader UltraTech Cement could see profits growing at 35-55%. Adani Cement's profit is likely to grow 2535% on-year, analysts said.Profits of most cement companies will grow on a year-on-year basis buoyed by higher prices but decline sequentially due to comparatively lower sales in the June quarter. While the March quarter is typically the strongest for cement demand, the early onset of monsoon rains this year also weighed on consumption this year.Companies will likely post Ebitda of Rs 1,165 per tonne of cement sold, said analysts at Elara Securities, noting that this is close to a four-year high for the industry.'With the onset of the lean season and the benefits of a benign cost environment largely behind us, we believe industry margin is set to peak in the near term in Q1FY26,' the analysts said.Analysts believe that with most positives for the industry priced in, companies are unlikely to see any aggressive upgrades. They, though, expect consolidation in the industry to continue, with smaller capacities being lapped up by the larger rivals.
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