- It looks that severe cost pressures will continue to impact profitability of companies in the Cement sector. Overall, select cement companies have registered a 6% growth in the volumes in Q1FY2009. Companies like Shree Cement, Madras Cements and Orient Paper and Industries have reported an impressive volume growth of around 26%, 12% and 10% respectively. This was mainly due capacity enhancements carried out by them.
- In terms of realisation, India Cement is expected to show a strong growth of 16.3% in its realisation due to a change in its market mix. Apart from this, the average realisation for Orient Paper and Industries is expected to increase by 13.2%, as the average realisation in the corresponding quarter of the last year was depressed due to clinker sales.
- Despite this, the cement industry as such looks quite promising. I estimate an average growth of 11.6% in the revenues and a almost 17% decline in the earnings for the select companies.
Industry Update - Cement industry forecast for Q1FY2009
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