Cement Sector Update - Volumes, Volumes, Volumes: Dolat Capital

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Dolat Capital Report

As the sentiments move on to the post Covid-19 cyclical recovery, we decipher the levers at play for the cement players.

We observe that for our coverage universe (12 companies, cumulative 73% of India cement consumption), revenues grew at 9.9% compound annual growth rate over FY16-21 with volumes (up 7.8%) as the major contributor to the growth.

Average realizations grew at 2.0% CAGR over FY16-21.

This translated into an Ebitda/tonne CAGR of 8.1% over the period, and contributed substantially to the re-rating of multiples.

Our analysis suggests that volumes shall continue to drive FY21-23E earnings recovery with realisations and Ebitda/tonne staying flat.

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