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Cement Sector: Price hikes largely sustains in every region expect South

ICICIdirect Research 21 Mar 2025 DISCLAIMER

Cement prices have increased considerably over the last 4 months, led by pick-up in demand across regions. North, Central and West regions have seen price increase of Rs 20-25/bag from Dec-2024 onwards followed by East region which witnessed price increase of Rs 15-20/bag. However, South region has seen price increase of only Rs 3-5/bag in this period as majority of price hikes have not sustained and rolled back. The key reason for roll-back of price hikes in south region has been oversupply and constant volume push by larger players 

In terms of cost structure, cement companies are expected to face some cost increase led by increase in pet-coke prices. Over the last 4 months, pet-coke prices have increased by 20-25% or by Rs 2500-3000/ton from Nov-2024 levels

20-25% increase in pet-coke prices will have an impact of Rs 70-80/ton (~Rs 4/bag) on overall cost. However, we believe that companies will be able to easily pass on this cost increase to consumers, considering that the demand environment remains healthy

Longer term cement demand growth outlook remains strong considering the pick-up in demand from housing & infra activities. Improvement in cement prices and continuous focus on operational efficiencies (like increasing usage of green power & fuel, freight and RM cost optimization) and positive operating leverage, would help cement companies to improve overall profitability over the next 2-3 years

We remain positive on cement companies like UltraTech Cement (TP- Rs 13500), Ambuja Cement (TP – Rs 600), JK Cement (TP – Rs 5700), JK Lakshmi Cement (TP – Rs 975)

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