India’s top cement maker, UltraTech Cement, reported a 38% decrease in quarterly profit on Saturday, dented by a surge in expenses.

Profit for the three months through December fell to 10.62 billion rupees ($131.2 million) from 17.10 billion rupees the same period a year earlier, UltraTech said in an exchange filing.

Expenses surged to 141.23 billion rupees from 114.22 billion rupees.

Competition is rising in India’s cement industry, with manufacturers increasing capacity to stave off the sector’s newest entrant, the Adani Group.

Costs of petcoke and coal stabilised in the quarter from their highs and will moderate this quarter and beyond, setting cement producers up for a better 2023 after a lacklustre 2022, analysts say.

Rising government spending, a recovery in the rural economy on a pickup in farm incomes and pre-sales of housing real estate should also help the industry recover.

Shares in UltraTech closed marginally lower at 7,177.15 rupees on Friday. The stock fell nearly 8% last year.