Cement prices are expected to rise during H2FY22, as cost inflation firms up unabatedly, said a report by HDFC Securities.
Cement demand has picked up from June 2021 onwards, as the Covid impact started to recede.
According to the report, cement demand is recovering well and has supported limited price correction during the monsoon period.
“We expect cement prices to rise during H2FY22, as cost inflation is firming up unabated and has impacted the whole industry. Good demand and increased consolidation should support the industry’s cost pass through ability,” the report said.
As per the report, rising fuel and diesel prices will further inflate the operating costs of the producers.
“While pet coke prices have surged another 20 per cent QoQ (double YoY), imported thermal coal prices have also spiked up by 33 per cent QoQ. Rising crude prices have pushed up diesel prices by 7 per cent QoQ. Thus, we have built in Rs 80-100 per MT input cost inflation and RS 20-40 per MT freight cost increase QoQ for our coverage universe,” it said.
The brokerage house expects aggregate revenue from its coverage universe to rise 14 per cent YoY on higher volumes in 2QFY22E.