Ramco Cements Q1 Preview: Weak prices, realisations, stiff competition pour concrete on profit hopes

On a sequential basis, net profit and revenue are seen falling 68 percent, and 17 percent, respectively.

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What factors are driving the earnings?

Weak demand: The slowdown in construction activities during the general elections in April and May adversely impacted cement sales in these months. Scorching heat, labour shortages, and unseasonal rain in some regions further dented demand during Q1FY25.

Muted prices: Cement prices entered Q1FY25 with a steep hike announcement in some regions, but with lower-than-historical average demand and a sudden ramp-up of M&As among large players, sustaining any price hike became impossible. Hikes implemented in April were reversed during May and June due to soft demand and stiff competition.

Decline in realisations: According to analysts at Motilal Oswal, price realization is likely to decline around eight percent YoY due to weak pricing in the southern region. Price realisation in cement refers to the average revenue a company earns per unit sold. It helps gauge the average income per ton, with higher realisation indicating better profitability per unit.

High Costs: The cement maker's depreciation/interest expenses are estimated to increase by 14 percent and 12 percent on-year, respectively, according to Motilal Oswal.

What to look out for in the quarterly show?

Analysts will closely monitor Ramco Cements' management commentary on demand conditions during this seasonally weak quarter, price sustainability amid intensifying competition, and ongoing sector consolidation.

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