Cement companies including Ambuja, Dalmia, Shree, and Ultratech are forecasted to experience higher income growth with timely growth.
Well-known cement companies are focusing to increase volumes of cement sales rather than pricing during the fiscal FY24, a pre-election year. Earnings-per-share (EPS) of such cement companies are expected to grow 25-58% in FY24 and earnings are expected to grow 15-25% year-over-year.
There are several factors driving companies to focus on this strategy. First, companies engaged in organic and inorganic expansion to gain market share.
According to calculations, “The sector reported an incremental capacity of 33 MT in FY23 so far, which is likely to increase competitive pressure.”
Second, capacity expansion in line with price fluctuations of raw materials such as petroleum coke and coal due to geopolitical conflicts does not allow companies to raise prices.
Another historical reason, construction demand increased in the pre-election year as the government increased spending on infrastructure and urban, rural, and low-cost housing. These segments generate 80 to 90% of cement demand. Analysts estimate demand will grow at a compound annual growth rate of 89% from FY22 to FY25.
Read More –Cement prices will increase by Rs 10-30/bag
