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Cement Companies May Roll Back Hike

Cement firms reconsider September price increase.

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Cement companies in India might be forced to reverse the price hikes implemented in September due to weakened demand and pressure from competitive market conditions, according to a report by Nuvama Institutional Equities. The recent price increase, which was expected to improve margins, may not hold as demand falls short of expectations.

Key Points:
Price Hike in September: Cement firms across India increased prices in September, aiming to improve their margins amidst rising input costs. This was seen as a strategic move to stabilize earnings as they were grappling with inflationary pressures on raw materials like coal and pet coke.

Weak Demand and Pressure: However, demand has not surged as expected. In some regions, particularly rural areas, construction activity remains low, which has contributed to the tepid demand for cement. The combination of high prices and low demand may make it difficult for companies to maintain the elevated price levels.

Competitive Market Forces: Cement manufacturers are also under pressure from competitors. Smaller players may keep prices lower to attract buyers, forcing larger companies to consider rolling back the September hikes. The competitive dynamics in regions like South India, where smaller firms are prevalent, are likely to impact larger companies’ pricing strategies.

Nuvama Report Insights: Nuvama Institutional Equities has highlighted that the September price hikes may not be sustainable given current market conditions. According to the report, the demand-supply imbalance and weak construction activities across many states could push cement companies to reconsider their pricing strategies.

Impact on Margins: If companies are compelled to roll back the price hikes, it could hurt their profit margins in the near term. Cement firms had hoped to recover some of their input costs through the price increases, but the competitive landscape and slow demand recovery could negate these gains.

Regional Variations: Price rollback might not be uniform across the country. In regions where infrastructure development is picking up pace, cement prices may hold. Urban areas with ongoing real estate projects and government infrastructure initiatives could see a sustained demand, making price hikes more viable.

Future Outlook: The outlook for the cement sector will largely depend on the pace of recovery in construction activity, particularly in the housing and infrastructure sectors. Any significant recovery in rural demand, which is currently subdued, could also influence whether the price hikes will remain or be rolled back.

Strategic Adjustments: Cement firms may need to adopt a cautious approach in the near term, balancing between maintaining market share and protecting margins. Price adjustments in response to market conditions could become more frequent as companies try to adapt to the fluctuating demand.

Conclusion:
The September price hikes by cement companies may face reversal due to weak demand, competitive pressures, and market dynamics. Nuvama’s report signals that while the increase was aimed at margin recovery, it may not be sustainable, particularly in regions with low demand. The future of cement pricing will depend on construction sector recovery and regional market conditions.

Concrete

Dalmia Bharat’s Q3 FY25 Net Profit Plunges by 75.19%

The company’s net consolidated total income dropped by 12.17% to Rs 32.18 billion in Q3 FY25.

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Dalmia Bharat, a leading cement manufacturing company, reported a sharp decline of 75.19 per cent in its net consolidated profit for the quarter ending December 31, 2025. The company disclosed in a BSE filing that its profit after tax stood at Rs 660 million in Q3 FY25, compared to Rs 2.66 billion in the same quarter of the previous fiscal year.

The company’s net consolidated total income dropped by 12.17 per cent to Rs 32.18 billion in Q3 FY25, down from Rs 36.64 billion in the corresponding quarter last year.

According to Puneet Dalmia, the managing director and CEO, India experienced a slightly slower start to the year following multiple years of high growth. He assured that the company’s capacity expansion plans were progressing as expected, with a target of reaching 49.5 million tonnes (MnT) by the end of the fiscal year.

Chief Financial Officer Dharmender Tuteja highlighted that cement demand growth in Q3 fell short of earlier expectations. He noted that the company’s volumes declined by 2 per cent year-on-year, while EBITDA fell by 34.5 per cent year-on-year to Rs 5.11 billion, primarily due to continued softness in cement prices. However, he expressed optimism for the coming quarters, citing improving demand and signs of a positive trend in prices.

During the quarter, the company completed debottlenecking projects at its facilities in Rajgangpur, Odisha (0.6 MnT), and Kadapa, Andhra Pradesh (0.3 MnT), increasing its total clinker capacity to 23.5 MnT. Additionally, it commissioned a 4 MW captive solar power plant in Medinipur, West Bengal, and 46 MW renewable energy capacity under Group Captive, bringing its total operational renewable energy capacity to 252 MW.

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Concrete

Gadchiroli Added to JSW’s List in Maharashtra’s Steel City Plan

A significant portion of this investment is likely to be concentrated in Nagpur and Gadchiroli.

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On the first day of the World Economic Forum (WEF) at Davos, the state government signed memorandums of understanding (MoUs) worth over Rs 3.35 trillion for industrial investments in Vidarbha. By 8:30 pm (Indian time), the largest deal was secured with JSW Group, involving investment proposals worth Rs 3 trillion, which are expected to create 10,000 jobs. A significant portion of this investment is likely to be concentrated in Nagpur and Gadchiroli.

The Pune-based Kalyani Group, with interests in the defence and steel sectors, also signed an MoU for an investment proposal in Gadchiroli. According to a source from the state’s industries department, there is a possibility that the company will establish a defence production unit there.

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Concrete

Q3 Preview: UltraTech Cement Set for 26% Drop in PAT

The company’s profit after tax is estimated at Rs 13.04 billion for the third quarter of FY25.

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UltraTech Cement is expected to report a 26 per cent decline in net profit year-on-year (Y-o-Y) for the quarter ending December 31, primarily due to lower realisations and higher depreciation, according to analysts. The company’s profit after tax is estimated at Rs 13.04 billion for the third quarter of FY25.

A survey conducted among five brokerages revealed that UltraTech Cement is projected to achieve a revenue of Rs 166.96 billion, reflecting a 1.2 per cent increase Y-o-Y.

Among the brokerages surveyed, Axis Securities presented the most optimistic projections, while B&K Securities predicted the slowest growth in both revenue and profit after tax (PAT) for the company.

According to Yes Securities, the company’s volumes are anticipated to grow by 9 per cent Y-o-Y to reach 29.76 million tons per annum. The growth in volumes is attributed to strong demand from institutional players and continued momentum in the housing sector.

Analysts noted that after weak demand growth of around 1-2 per cent in H1FY25, industry cement demand improved in Q3FY25. However, Motilal Oswal Financial Services, in its quarterly update, pointed out regional challenges, including pollution-related curbs in Delhi-NCR, sand scarcity, and unfavourable weather conditions such as severe cold and unseasonal rains, which negatively impacted overall demand growth.

The average cost of producing one ton of cement (excluding fixed costs) is expected to decrease by 4 per cent Y-o-Y, amounting to Rs 4,761 in Q3FY25.

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