Indian cement sector expects increased growth over medium term

Prices of petcoke have declined further in September 2015 as Reliance Industries has cut prices by INR 100 per tom MoM in second quarter of FY2016, now the prices have reduced by 10 percent YoY.

Imported coal prices (in INR terms) are down to around 8 percent  QoQ .The decline aids further headroom for energy cost savings in 2-3QFY16 for companies having high mix of pet coke and imported coal.

Motilal Oswal expects 2-2.5 percent QoQ moderation in road freight cost, benefiting companies with higher road mix should benefit. Amidst weak demand and low pricing power, moderation in cost push is offering partial resilience.  It is crucial to manage freight cost. All these factors will play a key role in positive  growth in cement sector in medium term.