A major cement manufacturer said on Thursday that it expects improving cement prices in its key southern market, after reporting a sharp decline in fourth-quarter profit caused by weak prices and lower volumes during what is typically a strong season.

Adjusted net profit from its cement operations dropped more than 76% to ?384.3 crore. The company stated that cement prices have begun to improve and are likely to remain stable despite the rising pace of capacity additions in the region.

The southern market, which contributes nearly three-fourths of the manufacturer’s total volumes, has trailed other parts of the country in pricing growth for several quarters but is now showing signs of recovery, according to recent market assessments. This trend is expected to benefit both region-focused producers and larger pan-India companies that have executed multiple capacity expansion deals.

The manufacturer also reported a 4% decline in sales volumes for the quarter—normally a seasonally strong period due to favorable weather that boosts construction activity and cement demand.

Average cement prices across India were 2% lower year-on-year during the quarter, according to industry data, contributing to a revenue decline of more than 10%, far steeper than analysts’ average estimate of a 0.4% drop.

The company further noted that a recent levy imposed by a southern state on limestone mining—an essential input for cement—will increase production costs by ?200 per ton. The levy, said to be the highest in the country, has prompted cement producers in the state, through an industry association, to seek relief from the government, which is currently considering the request.

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