Price hikes won't lead to gains for cement firms

The increase after six months of decline should only help neutralise cost pressures

The recent increase in cement prices, at best, provides some relief and is unlikely to drive profitability of cement companies, given muted demand and cost pressures.

Domestic cement demand has remained absent for the most part of FY18 so far. While the first half of FY18 bore the impact of goods and services tax (GST)-related adjustments, sand mining issues, labour shortages in some states and implementation of the Real Estate Regulatory Authority (RERA) Bill slowing down construction activities, led to lower-than-expected demand. With all this, ICRA now expects a rebound in cement demand only from the March 2018 quarter, against the