Shree Cement’s net profit for the July to September quarter fell over 67 percent to Rs 183.24 crore due to higher power and fuel cost, which the cement maker believes will only start to fall in the January to March quarter.

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“In the third quarter, the cost will come down only a little. Things will start correcting from the later quarter. Prices will increase when natural demand will come,” Hari Mohan Bangur, Managing Director of Shree Cement told CNBC-TV18 on Friday.

He added that for the second half of the fiscal, the price of cement is likely to go up by Rs 200 per tonne and the cost will come down a bit.

Bangur, however, expects demand to pick up after November 15. According to him, Shree Cement shall see a volume growth of 10 percent for FY23. “In the first half, our volume growth is around 13 percent. So, we expect 12-13 percent growth, but a bit conservative, so I am expecting 10 percent.”

The remark comes after the cement and clinker volumes rose 18 percent in September ended quarter to 7.46 million tonnes, aided by capacity ramp-ups and higher non-trade sales.

Brokerage firm Morgan Stanley believes the company’s weaker-than-expected EBITDA (earnings before interest, taxes, depreciation, and amortization) was led by lower realisations.

Shree Cement MD today said the firm wants to bridge the realisation gap and that it will also focus on increasing capacity utilisation.

“Our factor is to bridge the realisation gap as well as to increase the capacity utilization. So, there will be a two-pronged attack on the marketing side. One, is to improve realisation and the second is to increase the capacity utilisation.”

Meanwhile, Morgan Stanley has an overweight call on the company but has cut its target price on the cement stock to Rs 26,000 from Rs 28,000 per share. This means, the brokerage still sees a 22 percent upside from the last closing price on Friday.

It expects the company to do well in the current cycle both on the volumes and realisations front.

CLSA, on the other hand, has an underperform call on the firm with it expecting a marginal 0.6 percent upside in the stock to Rs 21,300 per share.

It noted that Shree Cement’s profitability in the last quarter was the lowest in more than a decade but volumes were robust. It expects profitability to improve with attempts at price hikes.

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(Edited by : Abhishek Jha)