Cement companies to increase prices from April onwards

Cement producers throughout the country are planning to increase prices by an average of Rs 10-15 per bag this month. This decision comes despite subdued demand due to a slowdown preceding general elections. Dealers anticipate that while price increases may be more pronounced in certain regions, particularly in southern India, they don't foresee these hikes being sustained. Instead, they expect increases of only around Rs 10-20 to persist. For the past five months, cement prices have been decreasing consistently. Average prices for the March quarter are now 5-6% lower compared to the December quarter, with the most significant price cuts occurring in east and south India. Despite expectations of a 6-8% year-on-year growth in volumes during the January-March period, which is typically robust, cement manufacturers have been unable to raise prices. Kotak Institutional Equities stated that competitive pressure among major players to expand their market share and cost deflation have been the primary factors contributing to the weakness in prices. Analysts suggest that with price hikes in April, cement producers might mitigate some of the impact of lower volumes during the quarter. However, they emphasize the critical importance of the sustainability of these price hikes, especially considering the tepid demand. If demand remains weak, there's a risk of either partial or complete rollback of these hikes. Ravi Sodah, an analyst at Elara Securities, anticipates a moderation in demand due to the upcoming general elections. He suggests that cement firms may need to control prices to safeguard against a significant decline in margins.