A major shift has occurred in India's cement industry after a challenging period of intense competition and weak demand. Traditionally, cement firms cut prices in response to low demand, prioritizing volume over pricing. However, in the past two months, these firms have raised prices despite demand remaining weak, and they've maintained these hikes. This shift suggests a new earnings story for the current fiscal year, surprising and encouraging analysts. To understand the strategy's viability and its long-term impact on well-positioned cement firms, read on for a detailed perspective.
THE BASICS
Based on analysts' discussions with dealers, the all-India average cement price rose by 4.6% in October '23 on a month-on-month basis. This increase can be attributed primarily to the consistent price hikes implemented by cement companies.
In October, cement firms raised prices by approximately ₹10 per 50 kg bag to ₹30 per 50 kg bag across various regions in India. It's worth noting that in September '23, cement firms had raised prices by a more substantial range of ₹45 per 50 kg bag to ₹50 per 50 kg bag.
Among the regions, the highest price hike was observed in the southern region, with price increases ranging from 9% to 9.5% on a month-on-month basis. The second-highest price hike was noted in the northern region at 6%, followed by the western region at 5.6%, and the central region at 2.8%.
Cement firms have been anticipating this growth in cement prices for quite some time. After a few quarters of cautiously increasing prices, it appears that, in the past two months, cement firms have adopted a conscious and focused strategy. They have sharply raised cement prices by approximately 12% to 13%. What makes this price hike remarkable is the timing at which cement firms have taken this bold and aggressive stance.
Denne historien er fra November 2023-utgaven av Beyond Market.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra November 2023-utgaven av Beyond Market.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
PRUDENT PRACTICES
Banks worldwide navigate a complex balancing act, steering economies toward growth while safeguarding financial stability through thoughtful management of interest rates and credit risks
RETAIN ROULETTE
Inexperienced investors spin the market wheel, chasing dizzying valuations and risking a bubble burst
UNRAVELED THREADS
Bangladesh's crisis disrupts global textiles, offering India a potential opportunity, but production constraints limit its gains
PASSING THE BATON
Succession planning helps ensure uninterrupted leadership
RISKY BUSINESS?
SEBI's efforts to protect retail investors from derivatives market risks could inadvertently dampen market volumes
INFLATION-PROOF YOUR CHILD'S FUTURE
Inflation might be stealing your child's future, but children's mutual funds can be their superhero
EMBRACE UNCERTAINTY, SAYS MARKS
Howard Marks urges investors to embrace uncertainty, long-term thinking, and focus on controllables, shunning in his memo “The Folly of Certainty”
IMPORTANT JARGON
70% OF INDIVIDUAL INTRADAY TRADERS IN THE EQUITY CASH SEGMENT MAKE LOSSES, FINDS SEBI STUDY
AN ASCENT T'O NEW HEIGHTS
The IMF predicts India's economy to reach 55 trillion by 2047, driven by various economic indicators showing positive growth and government initiatives
CARRY TRADE CRASH: GLOBAL MARKETS REEL
Japan’s Policy Shift Sends Shockwaves Through Global Markets, Including India, as Yen Carry Trade Disintegrates