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Deven Choksey Analysis Report
In Q1 FY25, the cement trade skilled subdued quantity progress YoY and ongoing stress on cement costs, leading to decrease realizations for cement firms.
Cement costs witnessed stress in Q1 FY25 as a consequence of basic elections, warmth waves, and trade consolidation.
All the businesses below our protection noticed a drop in Ebitda/tonne sequentially as a consequence of weaker realization.
The trade noticed main mergers and acquisition taking place lately particularly within the South area, with UltraTech Cement shopping for a stake in India Cements and Ambuja Cement buying Penna Cements.
By way of pricing outlook, the sector is predicted to expertise a reasonable enhance in cement costs by the top of CY24, owing to the delayed monsoon adopted by the festive seasons.
The medium-term outlook for the sector is promising, pushed by upcoming infrastructure initiatives, elevated capital expenditure, and rising demand for actual property and housing.
It’s anticipated that demand for cement will surpass the availability, regardless of the enlargement of capacities by firms.
Within the medium time period, the important thing triggers for the sector are-
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capability enlargement,
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realization,
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margin enchancment from cost-saving initiatives.
Prime Picks:
We preserve a optimistic outlook on ACC Ltd. and UltraTech Cement Ltd. as a consequence of their deliberate capital expenditures for FY25E and FY26E, latest merger and acquisition offers within the South area, alongside their cost-reduction methods.
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