Cement companies have been under pressure after major players were unable to sustain price hikes though a recent Kotak Institutional Equities report said that prices in February have seen a seasonal uptick but it was not underpinned by demand.

Speaking about the price outlook, Bina Engineer, director, Sanghi Industries said, “In the month of February the prices were up by Rs 10-15 per bag. There has been 7-8 percent increase compared to Q3.”

Talking about demand and volume growth, she said generally volumes have been subdued whole of this year and that would continue on YoY basis but sequentially, an uptick in volume is expected in the last quarter. "However, it is unlikely to impact prices in the month of March because the volume have been subdued so there is not much to gain in terms of volume by cutting the prices. So I would expect the prices to hold up,” she added.

When asked about their guidance of 2.3 million tonnes in terms of volume for this year and EBITDA per tonne of around Rs 850 for second half, she said, “Volumes could be slightly off the mark by 7-8 percent. However, EBITDA per tonne could be maintained or can improve on annual average basis."

We are seeing soft crude and therefore soft diesel prices. There is similar trend in coal prices and with the cement prices holding up, we don’t see any pressure on margins, said Engineer.

Giving the revised guidance, she said, "We expect volumes of 2-2.1 million tonne and maintain EBITDA per tonne at Rs 850, said Engineer.

Discussing the price outlook for the south based companies, K Ravi, MD of NCL Industries said, “Cement prices have gone up by Rs 20-25 per bag in February and demand has also improved substantially, particularly in Andhra Pradesh. So demand and prices were good in the month of January and February. We expect these prices to sustain at least up to March.”

This price increases are only in AP and Telangana, Ravi stated, adding that in other places in south they are still low.

Talking about their volume target for entire year, Ravi said, “We may not be able to touch 2 million tonne but we may end up near 1.95 million tonne.”

First Published:Mar 3, 2020 2:39 PM IST