Earnings of cement firms may recover from September

Earnings of cement firms may recover from September

A report by Religare Research shows that the earnings of cement companies would recover only from the second half of 2013-14 (from September 2013) when demand for cement rises and these firms regain pricing power.

Therefore, the firm expects earnings of cement companies to remain under pressure during Apr-June quarter and Jul-Sep quarter.

The report attributes muted prospect for earnings of cement companies during these two quarters to lacklustre demand and muted realisations.

The topline of cement firms may decline 4 percent on a year-on-year basis and EBITDA may fall 29 percent and profit after tax by a whopping 32 percent in the June quarter, the report expects.

Volumes declined for most companies except those with a presence in South India. Some pick-up in cement prices in the latter half of Q1 would help minimise the fall in realisations quarter on quarter QoQ (avg), Religare Research Analyst Mihir Jhaveri said in the report.

Volume of firms operating in North or West India may fall sharply, the report expects. Following a weak March, prices failed to pick up in April due to subdued demand.

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