South India's cement firms could see a sharp improvement in earnings

Cement companies in the south are expected to outperform in the short-run as prices in the region have improved by Rs 30-70 a bag. If prices remain high, these firms would see an improvement in earnings, said anElara capital research report. Cement prices in Hyderabad alone rose 28 per cent by Rs 60-70 a bag in the past few weeks. If current prices are to sustain, then South-based firms, such as Orient Cement, India Cements, Ramco Cement and Sagar Cement would see a sharp improvement in earnings in the range of 65-147 per cent on year over the next few quarters, said Elara Capital. Historically, high prices in South India have sustained for 6-24 months. In the fourth quarter of 2014-15 cement prices in Hyderabad increased 43 per cent YoY while the market cap of South-based firms had gone up in the range of 62-293 per cent. EBITDA had risen in the range of 82-250 per cent.