Cement companies set to hike prices from April onwards

prices have corrected for five months in a row now, and average prices for the March quarter are 5-6% lower as compared to the December quarter, with price cuts sharpest in east and south India.

Even as volumes in January-March period, which is traditionally a strong period, is expected to have grown 6-8% on year, cementmakers have not been able to raise prices.

"Competitive intensity among large players to gain market share and cost deflation have been the key reasons behind price weakness," Kotak Institutional Equities said.

With price hikes in April, cement producers may be able to offset some impact of lower volumes during the quarter, analysts said. The sustainability of these price hikes, though, is critical as demand remaining tepid may lead to a partial or complete rollback of these hikes, they said.

"We expect demand moderation due to the upcoming general elections, which would prompt cement firms to keep a check on prices to protect against any sharp contraction in margin," Ravi Sodah, analyst at Elara Securities said.

Price hikes in southern India are seen in the range of Rs 30-50 per 50 kg bag while that in central India is seen at Rs 15-20 per bag. In north India, price hikes are likely in the range of Rs 10-15 per bag while that in west India is seen at Rs 20-25. In the eastern regions of the country, price hikes are seen at around Rs 30 per bag.