CARE: Cement manufacturers’ profitability to improve in current fiscal
In a recently-released report, rating agency CARE Ratings has revealed that the improved price of cement will likely bring about a notable improvement in the profitability of domestic cement manufacturers in the current fiscal year, owing to higher realisation.
CARE said in its report that despite the fact that “monsoon impact” may cause a partial reversal in cement price increases in the near term, the average cement price during the current fiscal year will likely remain higher as compared with the average cement price in the last fiscal year.
Pointing out that the last fiscal was a challenging year for cement industry because of pressure on realisation as well as increased costs, CARE said that the increase in the price of the building material in the October-December of the last fiscal and the January-March quarter of the current fiscal will lead to higher realisation for cement manufacturers.
The CARE report asserted that the possibility of higher realisation for cement manufacturers is apparent, even though the average freight cost may be higher than the last fiscal due to increase in diesel and rail freight rates.
The report said: “Higher realisations …are expected to not only negate the impact (of higher freight rates) but also result in improved profitability margins on year-on-year basis.”
Source- The Financial Express
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