Cement companies are expected to witness lower volume sequentially in Q1FY23 as the demand had slowed down in May ahead of monsoon, said brokerage house Centrum Broking.
Coal prices are expected to be at elevated levels and will increase further in Q1FY23. Coal is used as a fuel in cement plants.
The cement companies increased prices during April 2022 but it was not sufficient to cover the increase in coal or pet coke prices, it said.
“The inability to pass-on cost fully to customers remains the primary concern. We expect cement margins to decrease on a quarter on quarter basis due to lower volume, higher coal prices which should more than offset an increase in cement prices,” it said in a report.
However, the sustaining price hike needs to be monitored as demand is slowing down in key markets.
In cement space, ACC, Ambuja Cements, and UltraTech Cement, are some of the preferred picks, said the report.