Indian Cement Makers Lean on Price Hikes to Shore Up Profitability

what happened

Indian cement producers are counting on higher prices and a seasonal rebound in construction to make up for a weak first half of the fiscal year, when rising input costs squeezed profits, according to Moody's. The strong seasonality of the December and March quarters is expected to be supported by government infrastructure spending, while prices are seen holding up because production costs remain higher.

In the September quarter, profitability at most players, apart from UltraTech Cement, fell year on year as fuel, power, logistics and packaging costs climbed. Executives at Dalmia Bharat and Nuvoco Vistas say recent price increases partly offset cost inflation, and they expect demand to pick up after Diwali.

why it matters

For Indian cement stocks, the key question is whether the price gains hold while fuel and power costs stay elevated. That will determine how much of the expected profit recovery shows up in quarterly results.

market impact

Indian cement stocks: higher prices support margins

• ▲Indian cement stocks pressure up — higher cement prices support producers' margins

tags

instruments