Indian Economy News

India's infra-driven economy will lead to a CAGR growth of 7-8% in cement demand: Report

  • IBEF
  • January 16, 2025

Cement demand in India is projected to remain robust in the coming years, with a compound annual growth rate (CAGR) of 7-8% over FY25E-27E, according to a report by JM Financial. Although a brief slowdown is expected in FY25E, the sector is set to experience strong growth, underpinned by positive demand fundamentals and structural changes within the industry. Key drivers of this growth include significant infrastructure development and a rise in construction activities across the country. The shift towards cost optimisation and de-risking strategies among cement manufacturers is also expected to mitigate the industry's cyclical nature, promoting long-term profitability.

The report emphasised that investors should focus on structural changes likely to boost long-term profitability rather than short-term fluctuations in cement prices. After remaining relatively low, cement prices saw a 3% MoM increase in December 2024, reaching a 10-month high. A 5-6% sustainable price hike is necessary to enhance asset returns, particularly for brownfield expansion. The cement industry is expected to add nearly 150 million tonnes (mt) of installed capacity between FY24 and FY27E, with the top six cement groups accounting for around 75% of this capacity. As supply growth aligns with demand, the utilisation rate is expected to remain stable at approximately 72%, positioning the cement sector for sustained growth. It is a key area of interest for investors in India's infrastructure-driven economy.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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