New Delhi, March 29 (IANS) Cement demand growth is expected to continue in Q4FY21, said India Ratings and Research (Ind-Ra).
Accordingly, the agency pointed out the aggregate sale volumes of listed cement companies grew 9 per cent YoY in Q3FY21.
This trend, Ind-Ra cited was led by the continued momentum in the rural segment and some traction in infrastructure.
“The strong performance in 3QFY21 restricted the volume decline at 6 per cent YoY in 9MFY21. Given the low covid-impacted March 2020 base, Ind-Ra expects continued volume growth in 4QFY21, resulting in an overall decline of just around 2 per cent YoY for FY21.”
“A strong rural demand and recovery in the infrastructure segment have been the key drivers of the strong recovery witnessed by the sector.”
As per the agency, eastern region is likely to clock growth in FY21 while central and north have also witnessed a smooth recovery.
“The recovery in the southern region has been slower, given its higher exposure to institutional sales and a prolonged monsoon, though exceptions such as NCL Industries Limited (NCL) and Deccan Cements Limited witnessed double digit growth in 9MFY21.”
“Notwithstanding some recovery 3QFY21 onwards, the Western region would decline the sharpest in FY21, given the highest incidence of Covid-19 within the country.”
Besides, Ind-Ra said capex completions in FY21 delayed due to Covid-19, bulk of the expected additions for the year would come on stream only in Q4FY21.
“Ind-Ra expects capacities of 12.7 million tonnes (mnt) to be added in 4QFY21 (9MFY21: 5.2mnt). However, Ind-Ra estimates the effective capacity addition during the year at around 10mnt, resulting in capacity utilisations of less than 65 per cent owing to the demand impact. The listed universe would continue to report higher utilisations than the overall industry average.”
On the rising input prices, the agency said that per coke prices hit $125 per mt in March 2021, and are likely to be almost 60 per cent YoY higher in Q4FY21 while coal price, that started increasing from September 2020, are likely to be around 30 per cent YoY higher.
In addition, it said diesel prices are likely to be 20-25 per cent higher YoY basis in Q4FY21.