Price hikes improve cement profitability outlook: CLSA
Cement

Price hikes improve cement profitability outlook: CLSA

Capital markets and investment group Credit Lyonnais Securities Asia (CLSA) Limited, told the media that the recent price hikes of the cement manufacturers aided the margin growth of the cement companies in FY22.

Cement companies had a consecutive increase in prices in March, April, and May. The current prices of all the Indian blended cement are 5-7% above Q4 FY21.

According to CLSA, the cement sector's profitability outlook has improved after the increases in prices.

It forecasts the industry's Ebitda per tonne will increase 3% year-on-year in FY22. Ebitda is short for earnings before interest, tax, depreciation, and amortization. CLSA expects that by FY24, the industry's profitability will be around 85% for a greenfield project to break even.

Some of the discretionary costs can be returned in FY22. Also, prices of higher commodities like coal, petroleum coke, and diesel are likely to increase. Cash cost per tonne is expected to increase 4% year-on-year in FY22.

For Q4 FY21, cement volumes were 15% higher and improved more than 25% year-on-year, while Ebitda per tonne was 3% up, compared to the previous quarter.

The impact of the second wave of Covid-19 is a key risk factor for the sector, CLSA said.

CLSA expects cement demand to grow 10% year-on-year in FY22 on a low base in FY21. According to the CLSA report, FY23 is likely to become normal before picking up again in FY24, a pre-election year.

Rural Independent Home Builders (IHB) and infrastructure will be the key demand drivers soon, with urban real estate likely to pick up with a lag. The sector's capacity and utilisation are poised to improve.

Image Source


Also read: Cement industry to witness improved demand from July 2021

Also read: Ambuja Cements and ACC bring industry 4.0 to Indian cement sector

Capital markets and investment group Credit Lyonnais Securities Asia (CLSA) Limited, told the media that the recent price hikes of the cement manufacturers aided the margin growth of the cement companies in FY22. Cement companies had a consecutive increase in prices in March, April, and May. The current prices of all the Indian blended cement are 5-7% above Q4 FY21. According to CLSA, the cement sector's profitability outlook has improved after the increases in prices. It forecasts the industry's Ebitda per tonne will increase 3% year-on-year in FY22. Ebitda is short for earnings before interest, tax, depreciation, and amortization. CLSA expects that by FY24, the industry's profitability will be around 85% for a greenfield project to break even. Some of the discretionary costs can be returned in FY22. Also, prices of higher commodities like coal, petroleum coke, and diesel are likely to increase. Cash cost per tonne is expected to increase 4% year-on-year in FY22. For Q4 FY21, cement volumes were 15% higher and improved more than 25% year-on-year, while Ebitda per tonne was 3% up, compared to the previous quarter. The impact of the second wave of Covid-19 is a key risk factor for the sector, CLSA said. CLSA expects cement demand to grow 10% year-on-year in FY22 on a low base in FY21. According to the CLSA report, FY23 is likely to become normal before picking up again in FY24, a pre-election year. Rural Independent Home Builders (IHB) and infrastructure will be the key demand drivers soon, with urban real estate likely to pick up with a lag. The sector's capacity and utilisation are poised to improve. Image Source Also read: Cement industry to witness improved demand from July 2021 Also read: Ambuja Cements and ACC bring industry 4.0 to Indian cement sector

Next Story
Resources

Ajmera Realty launches tree drive on Environment Day

Ajmera Realty & Infra India marked World Environment Day with a large-scale tree plantation initiative—Plant-with-Purpose—across its projects in Mumbai and Bangalore. The drive was inaugurated at Ajmera Manhattan and Ajmera Greenfinity in Wadala, with senior company officials and residents in attendance. The campaign encourages residents to embrace eco-conscious, self-reliant lifestyles by growing useful plants and trees within their communities. Horticulture expert Devendra Bhekar guided residents on creating and maintaining green spaces. Ajmera Realty planted over 500 trees..

Next Story
Resources

Twaron®-reinforced tyre powers Brunel’s solar race car

Teijin Aramid’s Twaron® with circular content will debut in Bridgestone’s race tyres for the 2025 Bridgestone World Solar Challenge, supporting the Brunel Solar Team’s Nuna 13 car. This marks the first use of the recycled-content aramid in a high-performance race tyre. The Twaron®-reinforced belts help enhance durability, reduce rolling resistance, and maintain lightweight strength—critical for the 3,000-km solar race across Australia. Bridgestone combines this with ENLITENTM tech and other recycled inputs to maximise environmental and performance outcomes. Teijin Aramid, a..

Next Story
Building Material

Kamdhenu Paints launches new wood coating range

Kamdhenu Paints has launched a comprehensive premium wood coating range designed for both interior and exterior applications. The collection includes high-performance solutions like Kamwood 2K PU for a rich matt or high-gloss finish, Kamwood 1K PU for clarity and stain protection, and the Kamwood Melamyne system for a smooth, durable finish. Also featured are Kamwood Wood Stains, which enhance wood grains with vibrant colour, and NC Sanding Sealer for high-build grain filling. The range is supported by Kamwood Thinners for ease of application and optimal finish. Saurabh Agarwal, MD, ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?