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HDFC Securities Institutional Equities
We estimate our coverage universe of 15 companies to deliver 8% YoY volume growth (three year compound annual growth rate: 8%) in Q2 FY23.
We estimate average utilisation of ~71% versus 78/70% QoQ/YoY. In our view, cement prices fell ~3% QoQ on pan-India basis in Q2. Prices fell 5-6% QoQ each in north and central regions, 3-4% each in east and west regions and ~1-2% in south. We estimate average net sales realisation for coverage universe to fall 3% QoQ, restricting YoY gains at 4% (three-year CAGR up 3%).
Fuel costs continued to trend up until mid Q2 and started to correct thereafter. This should drive up industry’s energy cost by another ~Rs 100-200 per million tonne (of cement) in Q2 FY23.
The benefits of the recent cool-off in fuel prices should be visible Q3 onwards after the exhaustion of high-cost fuel inventories.
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