Not a very good news for real estate builders, as retail cement prices rise by Rs 12 per bag. A sharp increase in price of Rs 36 in West and Rs 15 in South on a year-on-year basis was seen on the back of rising production costs. According to Kotak Institutional Equities Research Analyst Murtuza Arsiwalla, cement companies had to put up with the higher petroleum-coke prices that was increased by 13 per cent q-o-q to $96 per tonne in the first quarter of FY18, last month in September. Even the cement firms profit is expected to go down by 3 per cent y-o-y to Rs 828 per tonne with the growing load of increasing production cost, that makes the benefits of increased price negligible.
Seasonal weakness during the second quarter of FY18 this year had led to modest fall in price by Rs 8 each bag. Whereas, the regional price decline was observed to be remarkable, with the highest fall in price by Rs 14 per bag in North and Central areas. Though the decline in price across the southern region was not as great as that of Northern and central areas but had marked the fall by Rs 7. West and East regions witnessed the drop in price by Rs 3-5 per bag on a q-o-q basis, as reported by PTI.
However, The first quarter under GST could yield surprises on realisations as well as benefits from input, as per the report. The cement industry is likely to register 6 per cent y-o-y growth in Q2 FY18. Potential re-stocking of inventories may have helped volumes even as volume trends in the recent past have borne the brunt of GST rollout, demonetisation, and introduction of RERA, PTI quoted the report as saying.
