Cement prices see regional surge amid muted demand: Girija Shankar Ray
Might you broadly inform us that how primarily the demand for cement is shaping up as a result of in final three years costs have been flat despite the fact that GDP development charge has been above 6%, why is that?
Girija Shankar Ray: So, we did a short channel examine in January, February, and March, 9 days of channel examine, so in January you noticed round Rs 2 of worth hike, February additionally Rs 5, December additionally it was excessive that was due to central area worth hike, however in March this 9 days pricing was round, I can say Jap area had seen a really massive worth hike that’s Rs 15 to Rs 30 of worth hike, however sure this worth hike what we’re seeing from previous three-four months that’s majorly contributed by your Jap area and central area. Southern area costs are nonetheless stay, they’re muted and there’s no worth hike from previous 4 months in Southern area. See, from demand perspective, demand shouldn’t be that so nice which may have a lot better however due to the federal government capex is slowed down and lastly the final month the Kumbh Mela additionally that has given some type of quantity disruption in addition to the logistic situation was there, labour situation was there.
Even in truth upcoming Holi is there and Ugadi is there, so these are the elements which goes to dent the demand in addition to the pricing. So, regardless of the worth hike the businesses have taken just lately in March, so I imagine this isn’t going to maintain for longer time period, once more nonetheless 15 days extra are there, so we must be careful whether or not this worth goes to maintain or not as a result of typically March is a year-end quantity by lot of corporations.
So, once more the stress can be there. So, kind of what I can say regardless of the demand or pricing sustainability for those who see that you would be able to count on from second half of FY26, earlier than that lot of type of stress can be there when it comes to pricing stress what I’m seeing as a result of lot of the big gamers are literally shortly attempting to get the market share, so these pressures are nonetheless sustained out there which aren’t taking worth in any vital second. Petcoke is about 30-35% of the whole uncooked materials price for cement. Provided that oil costs have come down, will petcoke costs come down and if they arrive down , may this impression cement margins?
Girija Shankar Ray: See, ideally what occurs is petcoke costs from previous two-three months for those who see the petcoke costs really that has elevated 12 months on 12 months foundation. So, the businesses they preserve this power stock for 45 days to 50 days time period.
So, regardless of the worth spike in petcoke worth or worldwide coal costs or home costs, in truth CPCL home petcoke costs has elevated by Rs 630 per tonne final month, so these are the impression you will note in subsequent quarter, not on this quarter as a result of regardless of the costs low-cost stock that’s going to mirror on this quarter. However sure, regardless of the costs had been up for the petcoke and worldwide coal costs, the impression we are going to see in subsequent quarter.
What’s the view proper now given the quantity of consolidation within the business and all of the dynamics at play that we simply spoke about, is it a bullish take now on cement and what are the popular shares right here?
Girija Shankar Ray: For subsequent March quarter, once more what I’m speaking about March quarter we are going to see the excessive quantity, it’s like now from previous 9 months quantity for those who see there’s a spike of round 3.5% 12 months on 12 months foundation, 9 month FY25.
Clearly as I’m saying March quarter is a quantity pushed quarter. Some type of quantity uptick and kind of you will note 3.5% to 4% 12 months on 12 months quantity development for FY25. See, this might have a lot better due to sure causes as I discussed intensifying competitors in between the big gamers to moving into fast market share and secondly, the slowdown in authorities capex programme.
So, these are the problems we had been revolving round proper now that’s the reason we aren’t anticipating a lot quantity development for FY25.
You will notice type of quantity spike or type of spurt in quantity in FY26 that too you possibly can count on quarter two FY26 onwards you’ll count on some type of demand, however earlier than that I don’t count on a lot from the cement corporations however sure, once more yet one more concern that’s improve in petcoke and coal costs.
See, firm need to do two issues both they’ve to extend the worth or they’ve to make use of low price power stock to maintain the margin going ahead.
So, right here the priority is that pricing stress is there, so growing the pricing in a big means I imagine it isn’t a lot attainable proper now, however sure, corporations who use lot of inexperienced energies and who’re into WHRS or photo voltaic or captive coal mining, so they are going to be having some type of profit and their margin will broaden.
Mainly, what I’m speaking in regards to the regional gamers are going to learn proper now. As I discussed jap area costs are literally up by Rs 10 to Rs 15, repeatedly it has improved from previous two months, so this time on this quarter we will count on jap area gamers can be giving good numbers.
And yet one more level I want so as to add it right here, final quarter a lot of the corporations they utilized a distinct technique to present good numbers. Some corporations they performed quantity over costs, some corporations costs over quantity.
So, when I’m saying about costs over quantity, they don’t wish to lose the pricing regardless of having a low quantity gross sales. So, this time additionally similar type of situation we are going to see out there for this quarter.
