Cement has had its challenges in the fourth quarter

The fourth quarter of FY 18 has traditionally been ideal for cement companies, but this time around cement prices failed to rise in the busy season, despite rising cost pressures, Edelweiss said in a note, expecting that the cement industry will be a disappointment in the quarter.

Cement prices edged about 1% quarter-over-quarter and about 3% year-over-year in the fourth quarter of 2018.

Edelweiss expects sales volume growth of about 15% overall in the cement space, despite a low base owing to demonitisation.

Edelweiss expects volumes to jump about 28% yearly by volumes aided by the recent acquisition of JPA assets. However, EBITDA/t is expected to fall 9% on a year-on-year basis to Rs 82.4 crores as the acquired JP assets profitability is lower in comparison to erstwhile Ultratech.

The brokerage firm expects the operating profit and net profit to look better on a low base. Cement volumes is expected to grow  at about 5% on a yearly basis. However, volumes are weak owing to weak demand scenario in its key west region which accounts for 40% of its sales. Edelweiss expects EBITDA/t to rise 25% on a yearly basis, at Rs 74.7 crores.

Cement volumes is expected to grow at about 6% year-over-year, despite commissioning of new capacities as continued sand shortage in Rajasthan and Bihar impacted the company's sales, Edelweiss said in a report.  However, EBIDTA/t is to surge to 11% on a yearly basis to Rs 90.5 crore, despite input cost spike.

Edelweiss expects no fireworks in the upcoming quarter, however for the next 12 months they remain positive view on the cement sector.

The brokerage also expects a rebound owing to improving availability of sand in Uttar Pradesh, Bihar and Tamil Nadu and also expects infrastructure boost for the demand in the run up to elections.