Cement earnings may improve in FY20 on lower input costs
Although cement prices fell sequentially for the seventh consecutive month in December, analysts expect the companies to report better earnings given lower raw material prices and the fact that prices are still higher than the year-ago levels. On a sequential basis, the all-India average price in December fell by 2.5 per cent to Rs 339 per bag. It has been continuously falling from the peak of Rs 368 per bag in May 2019. Analysts are, however, optimists since the current price is still over 4 per cent higher than the year-ago level which will support the yearon-year comparison of financials for the December quarter. In addition, the price of pet coke, a major raw material for cement, has fallen by 25-30 per cent in the past six months. Given these facts, analysts expect cement realisations and volume to grow by 4-6 per cent for FY20.