Cement industry may be on recovery path as margin pressures ease

Share price of major companies are up 10-18% in the last one month, but analysts target prices suggest more upsides ahead

The cement industry has faced a combination of cost escalation and weak demand in the recent past. This has led to margin pressures with EBITDA per tonne dropping sharply in Q3, 2021-22 versus Q2, 2021-22. However, the industry could now be on the recovery path with analysts saying capacity utilisation is strong and the demand cycle is likely to improve given the policy thrust on infrastructure and hopes of an uptick on housing.

The cost inflation remains a serious worry however since fuel/energy costs are very high, and that is a critical input in cement manufacturing. Sand prices are also