Dalmia Bharat Group's MD Puneet Dalmia on Friday expressed hope that cement prices will rise in the fourth quarter of FY22 given the worst is not over on higher power and fuel costs. He also added that higher petcoke and coal prices have hurt the margins in the third quarter of FY22, while also adding that the input costs may cool off from the first quarter of FY23.
The company reported a mixed set of earnings for the December 31, 2021-ended quarter. Sales above estimates but realisations are down 5 percent sequentially. Further, the company has also seen an operational miss with EBITDA and margin failing to meet street estimates.
In an interview to CNBC-TV18, Dalmia said, “Typically, Q4 prices are slightly better than last quarter, so hopefully that should mitigate the cost spike. So even though the costs are spiking up and the worst is not over yet and some of the high-cost inventories will get consumed this quarter, I think the margin should remain protected from here or maybe slightly move up.”
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He expects the company’s EBITDA per tonne to hold above Rs 1,000 per tonne. “Given entry barriers rising, more consolidation is happening and demand is improving, the margin should stay above Rs 1,000 EBITDA per tonne number,” Dalmia said.
On demand, he said, “I am hopeful that demand should come back. There were a lot of issues with respect to rains, sand mining issues, labour issues etc., they have got sorted out. We are seeing good demand growth in this quarter and as demand improves, pricing should also improve a bit.”
For the entire interview, watch the accompanying video