Mixed Bag for UltraTech, Ambuja, ACC, and Other

The recent quarterly profit results from key cement sector participants, including UltraTech Cement, Ambuja Cements, ACC, and Dalmia Bharat, paint a mixed picture. While UltraTech and ACC outperformed forecasts, Dalmia Bharat and Ambuja Cements fell short due to lower realizations.

Impact of Seasonal Trends and Political Factors

Traditionally, the months of March, April, and May see increased construction activity, which benefits cement makers. However, the ongoing national elections have slowed government funding and workforce availability, affecting construction activity. This, combined with the impending monsoon season, has exacerbated investor concerns about cement equities.

Outlook for Cement Demand

Despite current obstacles, the outlook for cement demand in the upcoming fiscal year is encouraging. Analysts predict a weak market until the election results are released. Furthermore, no significant price improvement has yet been detected.

Analysts Insights and Channel Checks

Analysts at Jefferies India Pvt Ltd conducted channel inspections to examine the cement industry’s demand trends. Their findings indicate that industrial volumes for April will likely stay low, suggesting a halt in construction activity owing to the elections. Furthermore, attempts to raise prices at the beginning of April have failed, with traders expecting no price increases until after the election.

Implications for Q1 Performance

Subdued demand and pricing, combined with decreased volumes following the year-end push in March, are projected to dampen the unit EBITDA in the first quarter. While lower variable expenses and cost-cutting measures may give some respite, the overall view remains cautious.

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Naina Gupta, a seasoned editor at Atom News, brings a wealth of experience in journalism and a keen eye for compelling stories. With a background in investigative reporting, Naina is dedicated to delivering news that resonates with our diverse readership.