Cement Industry Expected to Rebound in Q3 FY25 as Volumes and Prices Steady

Volumes and prices will stabilize, hence the cement sector is likely to recover in Q3 FY25, which comprises the October-December 2024 quarter. Following a soft first half of the fiscal year, analysts expect mid-single-digit volume growth, which would indicate that the industry is at a turnaround point.Factors behind the recovery include growth in government expenditure in the infrastructure segment, a spurt in post-monsoon construction activity, and a dissipating festive season slowdown.

In terms of leadership, UltraTech Cement and Dalmia Bharat are likely to report strong single-digit growth in volumes. Ambuja Cements and ACC are projected to achieve mid-teen growth, fueled by recent acquisitions of Sanghi Industries and Penna Cement, alongside a master supply agreement between the two. However, Shree Cements is expected to underperform, with volumes likely declining. Among smaller players, Nuvoco Vistas is forecasted to outperform its peers with a 14% year-on-year volume growth, aided by a favorable low base.

Pricing Trends and Regional Performance

Cement prices, which touched a four-year low in the previous quarter, have indicated recovery. Analysts estimate a 2% quarter-on-quarter improvement in price realizations during Q3, although prices remain 8-10% lower compared to the same period last year.Regional trends point to a mixed picture. In the north and the west, prices have started to climb again, whereas in the south, the reverse is happening prices are trending downwards.At this time, the revival of the sector comes quite opportune when companies are hard-struck to balance higher input costs on one hand and competitive pricing on the other.

The stabilizing market dynamics and government-backed infrastructure projects have given hope for a better finish to the fiscal year.As the cement industry faces these challenges, the third quarter is likely to be a turning point, which will set the stage for growth in the following months.