UltraTech, ACC, Ambuja others: Weak Cement prices keep upside for share prices under check

Stock Market Today: UltraTech Cement, ACC , Ambuja Cement , Shree Cement JK Lakshmi Cement , The Ramco Cements share price have declined up to 6% in last one month while those of Dalmia Bharat Cement, JK Cement are almost flat. The same is because of softening Cement prices in the Monsoon impacted quarter despite positive expectations on volume growth during the ongoing financial Year.

The Cement prices averaged 4% down year on year and 1% sequentially during the June quarter. This had impacted profitability of UltraTech and ACC that have reported their Q1 performance already. UltraTech Cement's Ebitda per tonne declined 7% YoY to ₹951 versus ₹1,018 in the year ago quarter and was lower than ₹1,173 in the previous quarter as per Motilal Oswal Financial Services data. ACC Ebitda per tonne during the quarter at ₹664 also came lower than ₹818 in the year-ago quarter and ₹802 in the previous quarter.

Even Ambuja Cement that reported financial performance today also saw standalone Ebitda of ₹646 crore come lower than ₹949 crore in the year ago quarter, Ebitda stands for Earnings before interest tax depreciation and amortisation.

The cement prices All-India average price down ₹9 per 50kg bag in July 2024 as per Elara Securities channel checks. "Pricing pressure continues in July, with more pronounced price drops observed in South and East India. Therefore, all-India average retail price in July fell ₹9 per 50kg bag month on month to ₹341" said Elara analysts.

The ongoing monsoon season may keep a lid on upward movement in Cement prices, The Cement companies as UltraTech Cement, ACC , Ambuja Cement , Shree Cement JK Lakshmi Cement , The Ramco Cements and others though may see benefit of strong cement demand and softer coal prices , however in the near term monsoon season will keep prospects under check.

“We expect visibility on demand as well as prices in the cement industry to remain bleak for the next few weeks, primarily due to the ongoing Monsoon season” said Elara Securities.

However, once the rainy season subsides, a recovery in demand is likely, which should help stabilize and potentially increase cement prices, added Elara analysts. Additionally, subdued fuel prices along with most cement firms’ ongoing efforts to implement cost saving measures bode well for margin, as per analysts.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions