Operating margins under pressure

Operating margins under pressure

Revenues are expected to grow 5-10 per cent y-o-y. Besides valuations, a diversified presence and strong balance sheet makes UltraTech Cement (UTCL) better placed than most of its large-sized peers.

The earnings growth of the cement companies-UTCL, ACC, Ambuja Cements and Grasim Industries-for the quarter to March is expected to settle in the range of 25-30 per cent due to lower volume growth and realisations.

Operating margins are likely to come under pressure on the back of diesel price hike and surcharge in railway freight. High interest cost (with increasing debt) and higher depreciation (with increased capex) could impact net earnings. Therefore, sector PAT is likely to see a sequential growth but a decline y-o-y.

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