Cement firms shows up good sales in Q4

Cement companies were the surprise package this earnings season. They posted a strong set of sales, EBITDA and profit after tax as better prices led to higher realisations in central India and eastern India. Operational efficiencies and better operating leverage, despite increase in diesel and petcoke prices, also helped them perform well. Fourth quarter earnings of Dalmia Cement, Ultratech, India Cement, Shree Cement, Ramco Cement, ACC and Birla Corporation gave positive surprises while only that of Ambuja Cements gave a negative surprise. Further, cement companies guidance indicates the demand to be favourable in the coming years due to housing, infra and irrigation projects. For the past few years, the cement sector had been registering a mediocre earnings performance due to overcapacity leading to feeble price movement.