· Domestic cement dispatches for April’23 clocked in at 2.53mn tons, down 24.6%/25.1% MoM/YoY. Region-wise, North offtakes decreased by 22.5%/24.8% MoM/YoY to settle at 2.11mn tons. Likewise, volumes for the South witnessed a steep drop of 33.7%/26.5% MoM/YoY to report at 0.42mn tons.

· Richards Bay coal prices have declined amidst fallen demand from Europe, currently hovering at US$126/ton compared to CYTD avg. of US$146/ton.

· Increase in the cement prices and elevated gross margin kept the profitability of the companies intact despite a decline in the offtakes, wherein 9MFY23 profits of AKD Cement Universe increased by 11.6% compared to SPLY.

· With an overall shift in macro-policy focus from growth in previous years to consolidation, we expect sector volumes to decline by 18% for FY23 (FYTD down 17.5%YoY).

· Overall, we continue to advocate LUCK, MLCF, and FCCL (Dec’23 TP: 632.5/38.1/16.4 per sh) on the back of low leverage and better production efficiencies contributing to their margins going forward. Additionally, timely expansions will lead to the retention of market share.

Courtesy – AKD Research