Even in the fall of the stock market, the shares of cement companies have seen a strong rise. Ambuja Cement is up 1%, ACC 1.5%, Dalmia Bharat 5%, India Cements is up 1%.

What is the news?  Investigation of dealers by brokerage firm Investec shows that prices across India have increased by Rs 4 per bag month-on-month in September 2024.

However, the report said that in the second quarter of the financial year, costs declined by Rs 5 per bag compared to the first quarter, with the south and east regions seeing the biggest decline. Investigations indicate that some areas in the north, west and south were the first to announce hikes, Investec said. According to the brokerage, most dealers also said that the demand trend was sluggish in September due to heavy rains and water-to-cement ratio issues, and this led to cement mills cutting production. Elara Capital has also said in a brokerage note that the cement industry's profit is likely to be the lowest in Q2FY25. We believe weak demand and cement prices as well as negative operating leverage may impact profitability in Q2FY25. However, we expect a gradual improvement in cement demand in the upcoming quarters, which should enable the industry to take some price hikes. Elara Capital also pointed out that the all-India average price increased by ₹7 per 50 kg bag in September. Thus, efforts were made by the industry to stay afloat - the all-India average price increased by ₹5 per bag in August, followed by another hike of ₹7 per bag in September. Despite the improvement, the all-India average cement price fell by ₹8 per bag QoQ in Q2FY25, but is lower than the average QoQ decline of ₹12 per bag seen in the last five years (as the industry enters the quarter on a low base). Further, cement firms across various markets are expected to attempt price hikes in the range of ₹5-15 per bag in October, the brokerage said.