Concrete

Cement demand bounces back

Published

4 years ago

February 1, 2022

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With the onset of the final quarter of FY22, CareEdge expects cement prices to trend higher due to pick up in the overall construction activities giving a boost to cement demand. CareEdge (CARE Group) is a knowledge-based analytical group and is one of the leading credit rating agencies in India.

After gaining pace in October 2021, the demand offtake fell unexpectedly in November 2021 owing to construction bans in the Delhi NCR region, late and unseasonal rains in the South, availability issues of sand mining in the East and Uttar Pradesh and labour unavailability. Major slump was witnessed in the Eastern and Southern regions. Later, the demand picked up during December 2021 and has been firming up further during January 2022. Demand rebound in Q4 should bolster cost pass-through for the industry. This, coupled with the fact that the key cost-side elements (coal/pet coke/diesel) have softened from the higher levels have alleviated concerns of a further increase in the operating costs for the industry.

Though higher input costs will continue to impact the players in Q4FY22 due to the build-up of high-cost inventories, this should, thereafter, subside more in Q1FY23 assuming current trends in input costs. Therefore, margins of cement players are expected to bottom out in Q3FY22 and improve thereafter at the back of potential price hikes and waning cost pressures. Further to the earlier report dated October 28, 2021 (Cement Sector: Battling the cost wave), CareEdge reiterates that the macros of the cement industry continue to remain positive and the industry is expected to witness a robust mid-teen growth in overall cement demand in FY22 and thereafter 6%-7% Yo-Y in FY23. The demand is mainly driven by recovery of activity in the urban housing sectors, upcoming general elections in 2024, infrastructure projects as well as rural demand and renewed real estate demand. However, any potential halt on the construction activities amidst upsurge of infections pertaining to the third wave of Covid-19 shall remain a key monitorable for the growth in the coming months.

Demand momentum continues

The cement industry is expected to be benefitted by high volume growth, majorly driven by revival in demand from the urban housing sectors, upcoming infrastructure projects such as construction of roads, railways, highways as well as generous rural demand. The long-term drivers of demand such as National Infrastructure Protection Plan, Bharatmala projects, mission ‘Housing for All’, rapid urbanisation, rising rural incomes remain strong with increased government impetus on infrastructure projects amid the upcoming elections in 2024. While a decent demand and volume expansion was witnessed in the first seven months of FY22, the months of November and December saw muted growth mainly due to factors, including construction ban in the NCR, heavy rainfall in the South and few Northern states and issues related to availability of sand in the Eastern region and UP.

Production of cement fell by 3.3% in November 2021 year-on-year; however, the cumulative cement production index increased by around 29% during April to November 2021 over the corresponding period of the previous year. Nevertheless, some recovery has thereafter taken place in the second half of December month,which is a significant month for the sector, as it marks the onset of peak construction period. Furthermore, historically, cement demand in January has been 4% higher than December.

With the strong demand momentum to sustain, the credit outlook for the cement sector is expected to remain positive. However, any potential halt on the construction activities amidst upsurge of infections pertaining to the third wave of Covid-19 shall remain a key monitorable for the growth in the coming months. With healthy growth in volumes coupled with stronger balance sheets, many cement players have planned capacity additions to maintain their market shares. CareEdge expects capacity additions of about 100-110 MT between FY22 and FY25. The third wave of Covid-19 may put some temporary breaks on the expansion plans of players. Nevertheless, the pace of expansion and demand matching up with the same shall be a key monitorable for the sector.

Input Costs

The average fuel cost for the industry has increased by Rs 250-300 per tonne in H2FY22. There has been a decline in imported coal, pet coke and diesel prices in the last two months from their earlier peak levels, alleviating concerns of any further steep increase in the operating costs for the players. Although the fuel cost for the industry is believed to have peaked in Q3FY22, it would remain at slightly elevated levels for the players due to high-cost inventories in Q4FY22. Full benefits of fall in fuel prices are expected to start accruing from Q1FY23.

• Australian coal prices have fallen to USD 162-169 per tonne as in January 2022 from its peak of USD 224 per tonne in October 2021.

• Pet coke prices which move in tandem with crude oil prices fell to USD 150 per tonne in January 2022 from its peak of USD 200-220 per tonne in November 2021. The prices of domestic pet coke have increased from Rs 9,135/MT in December 2020 to Rs 20,781/MT in November 2021, and they declined in December 2021 with average price of Rs15,680/MT which is still 72% higher Y-o-Y.

Realisations: Expected to stay strong

The previous attempt by the cement players to hike the prices in October 2021 could not last long and these hikes were rolled back due to lack of demand in November 2021. With expected volume growth going forward, the industry is again poised to take price hikes. The price hikes are required to pass on the increased cost pressures as imported coal/pet coke and diesel prices, though lowered from previous high, remain elevated.

The month of October 2021 saw Rs 20-30/bag price hikes across regions, but these were partially rolled back in November-December 2021. Pan India prices seem up around 1% in Q3FY22 Q-o-Q led primarily by price rise in Northern, Central and Western regions but partially offset by Q-o-Q fall in prices in the Eastern and Southern regions. In FY22 on a Y-o-Y basis, pan India prices are likely to remain up around 4%-5%. With pickup in demand, companies are expected to announce price hikes in the range of Rs.10-25 per bag across regions for the month of January 2022.

Demand momentum should keep pace for the price hikes to sustain, and any potential halt on the construction activities amidst upsurge of infections pertaining to a possible third wave of Covid-19 affecting cement demand shall be key.

Due to the cost upsurge until November 2021 coupled with the roll back of the price hikes (earlier announced in October 2021) in the cement prices in Q3FY22, the EBITDA margins for the quarter ending December 2021 is likely to bottom out, though margins are expected to recover partially in Q4FY22 with the likely price hikes to be taken by players.

In the present circumstances where the sector is grappling with the higher input cost, a sustained increase of prices along with demand stand critical for the operational performance of the players in the near term. Going forward, CareEdge expects cement prices to trend higher in Q4FY22 due to a pickup in the overall construction activities, leading to a higher cement demand.

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Shree Digvijay Cement Reports Annual And Quarterly Results

Annual revenue rises as EBITDA expands sequentially

Published

1 day ago

May 5, 2026

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Shree Digvijay Cement Company Limited reported consolidated financial results for the quarter and year ended 31 March 2026, showing higher revenues and improved profitability. Revenue from operations for the quarter was Rs 2,084.7 mn, up from Rs 1,833.4 mn in the prior quarter, while revenue for the year was Rs 7,491.0 mn versus Rs 7,251.5 mn a year earlier. EBITDA for the quarter rose to Rs 251.0 mn from Rs 38.4 mn in the preceding quarter and reached Rs 746.1 mn for the year. Profit after tax for the year was Rs 250.0 mn.

Sales volume for the company s grinding and cement operations was zero point three six four mn t in the quarter and one point four zero three mn t for the year, while traded volumes were zero point zero three mn t in the quarter. EBITDA per tonne improved to Rs637 in the quarter and averaged Rs521 for the year. Under a brand usage, supply and distributorship agreement the company sold 29,928 t of Hi Bond cement, which generated Rs153.6 mn in revenue and Rs20.0 mn in EBITDA during the period.

The company said that it had commenced purchase and distribution of Hi Bond cement effective 19 March 2026 pursuant to the long term distributorship agreement, and that it had paid a refundable security deposit of Rs four bn under the same arrangement. Management indicated that the strategic integration with the Hi Bond network would support future growth and strengthen distribution capabilities. The board cited seasonally higher demand and improved pricing as factors behind the sequential improvement in realisations.

The board recommended a final dividend of Rs one per equity share subject to shareholder approval at the ensuing annual general meeting. The company reiterated focus on sustaining the positive momentum in revenue and margin metrics while integrating the new distributorship, and will continue to monitor market conditions and pricing trends to support further improvement in outcomes.

Concrete

Cement Production Up Eight Point Six Per Cent To 491.4 mn t In FY26

Icra Sees Seven To Eight Per Cent Growth In FY27

Published

2 days ago

May 4, 2026

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Icra reported that cement production volumes rose by eight point six per cent in the financial year 2026 to 491.4 million (mn) metric tonne (t). March output was 48.4 mn t, up four per cent year on year on a high base.

The agency projected that volumes are expected to grow by seven to eight per cent in the current financial year, supported by sustained demand from the housing and infrastructure sectors. Average cement prices were reported to have remained flat in March at Rs 340 per bag on a month on month basis, while prices for FY26 increased by two per cent to Rs 345 per bag year on year.

Among inputs, coal prices declined by 17 per cent year on year to USD 102 per t in April 2026 while petcoke prices rose sharply by 19 per cent month on month and 22 per cent year on year to around Rs 15,800 per t in April. Petcoke was higher by about five per cent year on year in FY26 and diesel prices were reported to have remained steady. Icra noted that coal, petcoke and diesel are expected to trend higher in FY27 and remain exposed to risks from the ongoing West Asia conflict.

The report emphasised that operating margins for Icra’s sample set of companies are estimated to moderate by 200 to 400 basis points (bps) in FY27 on account of a likely increase in input costs, with further downside risks should crude prices rise owing to geopolitical tensions. However, debt protection metrics are projected to remain comfortable and Icra maintained a stable outlook on the Indian cement sector.

Concrete

UltraTech Cement FY26 PAT Crosses Rs 80 bn

Company reports record sales, profit and 200 MTPA capacity milestone

Published

1 week ago

April 29, 2026

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UltraTech Cement reported record financial performance for Q4 and FY26, supported by strong volumes, higher profitability and improved cost efficiency. Consolidated net sales for Q4 FY26 rose 12 per cent year-on-year to Rs 254.67 billion, while PBIDT increased 20 per cent to Rs 56.88 billion. PAT, excluding exceptional items, grew 21 per cent to Rs 30.11 billion.

For FY26, consolidated net sales stood at Rs 873.84 billion, up 17 per cent from Rs 749.36 billion in FY25. PBIDT rose 32 per cent to Rs 175.98 billion, while PAT increased 36 per cent to Rs 83.05 billion, crossing the Rs 80 billion mark for the first time.

India grey cement volumes reached 42.41 million tonnes in Q4 FY26, up 9.3 per cent year-on-year, with capacity utilisation at 89 per cent. Full-year India grey cement volumes stood at 145 million tonnes. Energy costs declined 3 per cent, aided by a higher green power mix of 43 per cent in Q4.

The company’s domestic grey cement capacity has crossed 200 MTPA, reaching 200.1 MTPA, while global capacity stands at 205.5 MTPA. UltraTech also recommended a special dividend of Rs 2.40 billion per share value basis equivalent to Rs 240.