A combination of elections in four major states and low offtake in east India has put Q3 FY24 industry demand in the slow lane (pegged at ~4% versus ~12% in H1 FY24).
Muted volumes also had an impact on pan-India prices, restricting the QoQ hike to ~2% versus more than 4% anticipated in October 2023. While our coverage Ebitda is estimated to rise a lofty ~44% YoY (low base effect), volume miss in Q3 and weak exit for cement prices (1% lower versus Q3 average) offer limited scope for FY24 earnings upgrades (on the contrary, there are chances of some downgrade).
The recent decline in fuel rates does offer scope of further easing in cost; however, risk of low demand in FY25 (post-election year) and our expectation of continued volatility in cement prices offer little reason to cheer.
We stay Neutral on the sector.
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