New Delhi : According to a report from Crisil, the cement sector is forecasted to experience a decrease in growth to 475 million tonnes this year, with a slower rate of 7 to 8 percent due to reduced growth in the first half following two years of double-digit growth. The demand for cement increased by only 3 percent in the first quarter of FY2024-25 due to a prolonged heatwave and lack of labor because of the general elections, and it is expected to have grown at a similar rate in the second quarter due to seasonal factors.
However, the agency reported that the second half of the year is expected to be positive for the sector, with improved margins anticipated for this fiscal year. The report stated that the demand for cement will increase at a slower rate of 7-8 pc annually, reaching 475 million metric tons in the current fiscal year. This comes after a compound annual growth rate of 11 pc between fiscal years 2022 and 2024. The report, analyzing 18 cement manufacturers accounting for over 85 pc of domestic sales volume, predicts that the operating profitability of cement players is expected to remain between Rs 975-1,000 per tonne, exceeding the ten-year average of Rs 963 per tonne.
Anticipated increase in housing sector, making up majority of cement demand, likely to benefit from strong monsoon, leading to growth in rural housing demand. It was mentioned that government investment in infrastructure development, making up 30 percent of cement demand, will also help support demand. It was noted that while spending was slow until July, the government's capital expenditure is expected to ramp up in the third quarter of the fiscal year, leading to an increase in cement demand from the infrastructure sector. The report anticipates a rise in government expenditure on infrastructure projects
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