The Indian cement industry started witnessing consolidation from the second quarter (June to September 2022) of the current fiscal year. The wave was created by the ports-to-power conglomerate the Adani Group acquiring Ambuja Cements and ACC from the Holcim Group for $6.5 billion.
In his next big act, Gautam Adani is eying the purchase of the cement assets of the debt-laden Jaypee Group at an enterprise valuation of Rs. 5,000 crores. In another move, Sajjan Jindal-owned JSW Cement purchased a limestone mine and land in Madhya Pradesh from India Cements. RK Damani-owned India Cements is a cement producer primarily located in Southern India.
All these developments come on the back of huge capital expenditure plans leading cement manufacturers of India have announced including Aditya Birla Group-controlled UltraTech, JSW Cement, and India Cements.
However, amidst all this news, KR Choksey’s report on the cement sector projects a mixed short-term outlook. The brokerage firm estimates cement producers to report a decline in profits for the July to September quarter of the present financial year.
The brokerage house has provided the following estimates on cement manufacturers for Q2FY23:
UltraTech Cement Ltd.
● Net profit is projected to decline 19.2% year-on-year (Y-o-Y) and decrease 33% quarter-on-quarter (Q-o-Q) to Rs. 1,060.8 crores.
● Net sales are estimated to increase 13.7% Y-o-Y but drop 9.9% Q-o-Q to Rs. 13,665.3 crores.
ACC Ltd.
● Net profit is projected to decline 47.6% year-on-year (Y-o-Y) but increase 3.8% quarter-on-quarter (Q-o-Q) to Rs. 236 crores.
● Net sales are estimated to increase by 13.1% Y-o-Y but fall 5.1% Q-o-Q to Rs. 4,241.2 crores.
Ramco Cements Ltd.
● Net profit is projected to decline sharply by 65.4% year-on-year (Y-o-Y) and 32.9% quarter-on-quarter (Q-o-Q) to Rs. 73.2 crores.
● Net sales are estimated to increase by 10.9% Y-o-Y but fall 6.3% Q-o-Q to Rs. 1,667.2 crores.
Shree Cement Ltd.
● Net profit is projected to drop 48.2% year-on-year (Y-o-Y) but increase 4.4% quarter-on-quarter (Q-o-Q) to Rs. 291.8 crores.
● Net sales are estimated to increase by 12.7% Y-o-Y but decrease by 13.9% Q-o-Q to Rs. 3,801.2 crores.
Written By – Vikalp Mishra
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