Cement companies in India recorded the highest ever OPBIDTA per mt at Rs 1,372 per mt in quarter 1 (Q1) FY 2022, surpassing the previous peak of Rs 1,306 per mt achieved in Q1 FY 2021, despite cost side pressures, said ICRA Limited.
The all-India cement production decreased by 12% quarter on quarter (QoQ) to 82 million mt in Q1 FY 2022, owing to the state-wise lockdowns due to the pandemic, which had an impact on demand in April-May 2021. However, it was higher by 54% year on year (YoY) because of the lower base in April 2020 on the back of lockdown.
In 4M FY 2022, the production is less by 2% compared to pre-covid levels. ICRA anticipates the all-India cement production to record a rise of about 12% in FY 2022, aided by the pent-up demand, the pickup in infrastructure activity, and rural housing demand.
ICRA, Corporate Ratings, Assistant Vice President & Sector Head, Anupama Reddy, told the media that the sales amounts of ICRA’s sample one observed a drop of 20% QoQ due to the impact of the second wave of Covid-19, however, higher by 44% YoY. The net sales realisations saw an increase of 4% YoY and 5% QoQ on the back of the price hikes led by cement firms in Q1 FY 2022.
While the cement company observed cost-side pressures, in Q1 FY 2022, the companies report the highest ever OPBIDTA per mt at Rs 1,372 per mt, exceeding the prior peak of Rs 1,306 per mt obtained in Q1 FY 2021, majorly backed by the higher net sales realisations and the cost optimisation measures initiated. The major input prices observed an improvement in Q1 FY 2022 by 26%, 26%, and 9% individually on a YoY basis.
While the OPBIDTA per mt in Q1 FY 2022 exceeded the prior peaks, the elevated and increasing input prices could exert pressure on operating margins, which are expected to decrease by 200 to 230 bits per second (bps) in FY 2022, said Reddy.
Also read: Indian cement industry to add 80 mt cement capacity through FY24
