New Delhi, Dec 9 (LatestNewsX) – A fresh analysis indicated that cement producers are likely to enjoy a rise in profit margins of around 2.5 % to 3.5 % this fiscal year, driven by better revenue from larger sales volumes and a shift towards higher‑priced products, even though prices sold to customers remain steady and input costs are still high.
The report from Crisil Intelligence noted that the GST cut from 28 % to 18 % might keep retail prices under pressure. However, the move towards premium products and stronger demand will counterbalance that effect, boosting the companies’ earnings.
Cement output is forecast to grow between 6.5 % and 7.5 % year‑on‑year, following a 5 % rise in the previous fiscal. The first half saw a modest 5 % increase, while the second half is expected to jump 8 % to 9 %, fueled by pent‑up demand and improved liquidity.
Based on data from 14 leading manufacturers—who together account for about 85 % of the industry’s revenue—average pan‑India prices are projected to stay roughly within ₹354–₹359 per 50 kg bag.
“The average pan‑India cement prices saw a modest 3 % on‑year increase during the first half,” Sehul Bhatt, Director, Crisil Intelligence, said.
“However, we anticipate the full impact of the GST reform will be realised in the third quarter, leading to a 4‑5 % decline in retail prices in the second half of the fiscal. Despite subdued pricing, the industry is poised for higher realisations this fiscal, driven by healthy volume growth,” Bhatt added.
Excluding GST, the sector’s prices are expected to climb 3 % to 4 % year‑on‑year in the next quarter, but the overall price drop due to the GST reduction should still be felt.
In the first half of the current fiscal, realisations grew by 5 %. Momentum is expected to slow in the second half, with earnings rising only 0 % to 2 %.
Higher limestone costs are likely to keep raw‑material expenses elevated, yet Crisil predicts operating margins will expand to 18 %–20 % from about 16 % last year, as total costs are expected to remain stable.
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