Cement companies' 02 profitability to surge on strong volume

Indian cement producers are gearing up for a prosperous September quarter, as they project remarkable year-on-year volume growth and the added benefit of reduced power and fuel costs. Analysts predict that the industry's average profitability is poised to surge by a minimum of 50 percent when compared to the previous year. While some dip in operating margins is expected due to seasonally weaker demand, the year-on-year figures are projected to exhibit an impressive increase, potentially rising by as much as 400 to 600 basis points on average. Notably, ACC and Ambuja Cements are expected to achieve the most significant EBITDA expansion, primarily attributed to a lower base. Systematix Institutional Equities reported, ACC and Ambuja would witness higher EBITDA expansion due to a low base, while we expect Ultratech, Shree Cement, and Dalmia Bharat to experience a margin expansion in the range of ?7 to ?12 per ton. Robust cement demand, estimated to grow by 12 to 14 percent year-on-year, has been sustained by state-level spending in anticipation of upcoming elections, coupled with the impending central elections. Cement producers appear set to reap substantial rewards in the forthcoming quarter.