Cement Sector Growth Slows in Q1FY25: Icra
By Rediff Money Desk, New Delhi Jul 04, 2024 17:13
India's cement sector saw a muted growth of 2-3% in Q1FY25 due to a slowdown in construction activity, but is projected to grow 7-8% in FY25. Read more about Icra's analysis.
New Delhi, Jul 4 (PTI) The cement sector has witnessed a muted growth of 2-3 per cent in the first quarter of current fiscal on account of a slowdown in construction activity because of the Lok Sabha polls, according to a report from rating agency Icra.
However, the overall volumes for the FY2024-25 are likely to expand by 7-8 per cent driven by a healthy demand from the infrastructure and housing sectors.
"Nevertheless, the government's focus on infrastructure projects, sanction of additional houses under the Pradhan Mantri Awas Yojana (PMAY), and the industrial capex is expected to meaningfully improve cement volume offtake in H2 FY2025," it said.
The report also projects further consolidation in the cement industry by the top players to increase their capacity.
The sector has witnessed consolidation by leading players such as Aditya Birla group firm UltraTech Cement and Adani group firm Ambuja Cements.
Besides, the sector is also expected to continue its organic growth in the medium term as makers continue to invest to expand capacity.
"While organic growth is expected to continue in the medium term, cement companies are also preferring the inorganic route to boost capacities rapidly," it said.
ICRA estimates that the market share of the top five cement companies witnessed a steep rise to 54 per cent as of March 2024 from 45 per cent as of March 2015.
Now it "projects it to further increase to 58-59 per cent by March 2026, resulting in consolidation in the cement industry", it said.
Moreover, the cement companies may also witness an improvement in their operating profit by 1-3 per cent due to softened raw materials prices.
"While the cement prices are projected to largely sustain at previous-year levels, some softening of cost-side pressures primarily power and fuel costs along with an increasing focus on green power, is likely to result in an improvement in OPBITDA/MT by 1-3 per cent YoY to Rs 975-1,000/MT," Icra Corporate Ratings Vice President and Co-Group Head Anupama Reddy said.
The Icra report also predicts an increase of green power by the cement manufacturers to a range of 40-42 per cent of the total power mix by March 2025 from 35 per cent as of March 2023.
"Major cement players in the country aim to reduce their emissions by 15-17 per cent over the next 8-10 years by increasing the share of blended cement, which uses less clinker and consequently less fuel, boosting the share of green power consumption through a mix of solar, wind and waste heat recovery system (WHRS) capacities," it said.
However, the overall volumes for the FY2024-25 are likely to expand by 7-8 per cent driven by a healthy demand from the infrastructure and housing sectors.
"Nevertheless, the government's focus on infrastructure projects, sanction of additional houses under the Pradhan Mantri Awas Yojana (PMAY), and the industrial capex is expected to meaningfully improve cement volume offtake in H2 FY2025," it said.
The report also projects further consolidation in the cement industry by the top players to increase their capacity.
The sector has witnessed consolidation by leading players such as Aditya Birla group firm UltraTech Cement and Adani group firm Ambuja Cements.
Besides, the sector is also expected to continue its organic growth in the medium term as makers continue to invest to expand capacity.
"While organic growth is expected to continue in the medium term, cement companies are also preferring the inorganic route to boost capacities rapidly," it said.
ICRA estimates that the market share of the top five cement companies witnessed a steep rise to 54 per cent as of March 2024 from 45 per cent as of March 2015.
Now it "projects it to further increase to 58-59 per cent by March 2026, resulting in consolidation in the cement industry", it said.
Moreover, the cement companies may also witness an improvement in their operating profit by 1-3 per cent due to softened raw materials prices.
"While the cement prices are projected to largely sustain at previous-year levels, some softening of cost-side pressures primarily power and fuel costs along with an increasing focus on green power, is likely to result in an improvement in OPBITDA/MT by 1-3 per cent YoY to Rs 975-1,000/MT," Icra Corporate Ratings Vice President and Co-Group Head Anupama Reddy said.
The Icra report also predicts an increase of green power by the cement manufacturers to a range of 40-42 per cent of the total power mix by March 2025 from 35 per cent as of March 2023.
"Major cement players in the country aim to reduce their emissions by 15-17 per cent over the next 8-10 years by increasing the share of blended cement, which uses less clinker and consequently less fuel, boosting the share of green power consumption through a mix of solar, wind and waste heat recovery system (WHRS) capacities," it said.
Source: PTI
Read More On:
DISCLAIMER - This article is from a syndicated feed. The original source is responsible for accuracy, views & content ownership. Views expressed may not reflect those of rediff.com India Limited.
You May Like To Read
TODAY'S MOST TRADED COMPANIES
- Company Name
- Price
- Volume
- Vodafone Idea L
- 9.17 ( -6.43)
- 158804255
- G V Films
- 0.92 ( -2.13)
- 92620172
- Srestha Finvest
- 0.93 (+ 4.49)
- 40021818
- GTL Infrastructure
- 2.21 ( -4.74)
- 33334323
- Spicejet Ltd.
- 57.56 ( -8.33)
- 31426149
MORE NEWS
India Calls for Harmonized Probiotic Guidelines
India advocates for harmonized guidelines for probiotic foods and supplements at the...
Invest India Office in Dubai to Attract UAE...
India to open Invest India office in Dubai to attract UAE investments, announced by...
BOBCARD Ltd Appoints Ravindra Rai M as MD & CEO
BOBCARD Ltd, a subsidiary of Bank of Baroda, has appointed Ravindra Rai M as its new...