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Large integrated players are likely to have median earnings before interest, taxes, depreciation and amortization (EBITDA) margins in the range of 23% to 24% in 2013, comparable to the FY12 levels.

10 Jan 2013

MUMBAI (Commodity Online): Cement demand in India is expected to grow between 5%-8% year on year in 2013 according to a revised outlook by India Ratings for Indian cement manufacturers.

The agency has revised its outlook for the Indian cement manufacturers to stable to negative for 2013 from negative in 2012.

Large integrated players are likely to have median earnings before interest, taxes, depreciation and amortization (EBITDA) margins in the range of 23% to 24% in 2013, comparable to the FY12 levels.

However, smaller or partially integrated players are likely to exhibit margins ranging from 17%-19%, lower than the median margins observed for such companies in FY12.

The agency expects credit profiles of large cement companies with superior cost position and pan-India presence to remain stable in 2013; however, smaller companies with unfavourable cost structure and regional concentrations are likely to be under pressure.

The agency also expects capacity additions to be moderated in the medium term (5%-7% of total capacity) even as capacity utilisations in FY13 could be around FY12 levels. Utilisation meanwhile is expected to improve significantly only by FY15.

Cement production volume in 2012 was mainly driven by a relatively robust activity in housing and commercial real estate.


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