Indian cement makers’ price hikes to support margins: Fitch Ratings
The recent price increases by India's cement companies will counter the higher energy costs, Fitch Ratings said.
Fitch expects that the demand for cement will not be affected so much by the restrictions to curb the spread of Covid-19 this time around. It also expects that ehe larger cement companies' strong profitability in the financial year ended March 31, 2021 (FY21) should cushion their financial profiles against downside risks.
“Key energy commodities, including petroleum coke, imported coal and diesel, which together account for more than 50 per cent of cement makers' costs rose sharply, particularly after Q3FY21," it said.
It believes that the fresh curbs to contain the resurgence of coronavirus in India after March 2021 are more localized and there is significantly less disruption to logistics services and labour availability. Unlike last year, manufacturing plants and construction sites can operate in most States.
Furthermore, Fitch cited that the localised curbs, which are effective in most states, could cause cement demand to drop by more than 20 per cent in Q1FY22 from Q4FY21.