SYNOPSIS:
ACC and Ambuja Cements possible face Q2 FY26 sequential declines on account of smooth pricing, seasonal demand, and monsoon influence, although YoY development, operational efficiencies, and GST advantages help resilient margins post-festive restoration.
Based on funding brokerage agency Prabhudas Lilladher, the cement sector beneath its protection is predicted to report a quarter-on-quarter decline of round 15 % in income, 26 % in EBITDA, and 36 % in PAT for Q2 FY26. On a year-on-year foundation, nonetheless, the sector might even see development of roughly 13 %, 55 %, and 95 %, respectively. The sequential weak point is primarily attributed to smooth pricing developments and muted demand throughout what is usually a seasonally weak quarter.
Cement costs remained regular in July, however witnessed a correction in August on account of subdued demand and widespread rainfall throughout the nation. Costs stayed largely steady in September (after adjusting for GST modifications), regardless of ongoing challenges equivalent to heavy rains, labour shortages, and festive season disruptions.
Demand developments had been uneven throughout areas, constrained by sluggish infrastructure spending and expectations of a GST discount, though the agricultural and particular person house builder (IHB) segments offered some cushion. Consequently, industry-wide quantity development is projected to remain within the low single digits. On the price aspect, pet coke costs have edged as much as round $ 120 per tonne, which may strain working margins within the upcoming quarters.
Throughout Q2 FY26, the southern and jap areas skilled the steepest worth corrections, which adversely impacted profitability. In consequence, cement corporations throughout the protection universe are anticipated to report a sequential decline in EBITDA of Rs. 150-240 per tonne, following a powerful efficiency in Q1 FY26.
With the GST rationalisation course of nearing completion throughout most areas, instant worth hikes seem unlikely, as corporations could await a significant restoration in demand earlier than taking such actions. Cement costs are anticipated to agency up as soon as demand improves after the festive season, supported by the advantages of GST changes and a revival in actual property exercise pushed by general financial momentum.
Key components to look at embrace the tempo of demand restoration after Diwali, developments in infrastructure execution and authorities expenditure, the trajectory of cement costs amid GST stabilisation, and the motion of pet coke and different uncooked materials prices in H2 FY26.
With a market cap of Rs. 34,974.4 crores, the inventory was buying and selling within the inexperienced at Rs. 1,862.45 on BSE, up by round 0.3 % on Thursday. In Q2 FY26, the brokerage initiatives ACC to report income from operations of Rs. 4981.8 crores, reflecting an 8 % development YoY, regardless of a pointy 18.2 % decline QoQ, primarily attributed to seasonally weak demand and monsoon influence resulting in an estimated 16 % drop in volumes.
EBITDA is predicted to develop by 15.8 % YoY to Rs. 505.4 crores, with margins enhancing by 69 foundation factors to 10.1 %; nonetheless, EBITDA exhibits a major 35 % sequential drop on account of a 2 % lower in realisations and decrease volumes, compressing the quarterly margin by 264 foundation factors. Consequently, EBITDA per tonne is anticipated to lower by roughly Rs. 154 QoQ to Rs. 523, whereas remaining up Rs. 53 YoY.
Revenue earlier than tax (PBT) is anticipated to say no by 18.9 % YoY and 53.9 % QoQ to almost Rs. 259 crores, whereas adjusted PAT is estimated at Rs. 193.2 crores, down 13.9 % YoY and 48.6 % sequentially, highlighting the strain from increased prices and decrease realisation in the course of the quarter.
With a market cap of Rs. 1.4 lakh crores, the inventory was buying and selling within the inexperienced at Rs. 568 on BSE, up by round 0.2 % on Thursday. For Ambuja Cement, Prabhudas Lilladher anticipates strong YoY development, with gross sales forecast at Rs. 8,383.5 crores, up 13.6 %, although sequentially down 18.5 %, as consolidated volumes are anticipated to shrink by round 16 % QoQ amid sluggish demand and seasonal headwinds.
EBITDA is projected at Rs. 1,374.7 crores, up 41.2 % YoY, leading to a margin enchancment to 16.4 %, however marking a 29.9 % decline QoQ as weak pricing throughout areas and the influence from Penna operations compress realisations by 3 % sequentially.
The brokerage expects EBITDA per tonne to lower by Rs. 176 QoQ to Rs. 889 per tonne. Whereas PBT and adjusted PAT are forecast to develop 20 % and 36.9 % YoY, respectively, substantial sequential declines are seen as a result of difficult working surroundings.
Prabhudas Lilladher notes that, regardless of the near-term adversity from monsoon-led demand disruption and pricing strain, each corporations’ operational efficiencies and up to date strategic initiatives are anticipated to help a resilient margin construction because the enterprise surroundings normalises post-monsoon.
Written by Shivani Singh
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