The Indian cement industry is facing a slower growth rate than initially projected. While earlier estimates predicted a 7-8% YoY increase in cement volumes for FY2025, the revised forecast suggests a more modest 4-5% growth.
Post-Election Recovery: The construction sector, particularly housing and infrastructure, has been slower to recover than anticipated after the general Elections.
First Half Challenges: The first half of FY2025 was marked by election-related disruptions and heavy monsoon rains, further hindering growth.
Despite the challenges, the industry remains optimistic about a stronger second half of FY2025. Factors contributing to this optimism include:
Rural Housing Demand: Improved farm income, robust monsoon, and high reservoir levels are expected to boost rural housing demand.
Urban Housing Demand: Sustained demand for urban housing is likely to continue.
Infrastructure Spending: The government's focus on infrastructure projects, particularly in H2 FY2025, can significantly boost cement demand.
Cement companies are expected to witness improved operating performance from Q3 FY2025 onwards. This is attributed to potential price hikes, increased government spending on infrastructure, a pick-up in construction activities, and stable input costs.
Overall, while the cement industry's growth trajectory has moderated, the positive outlook for the second half of the fiscal year, driven by factors like rural and urban housing demand and government infrastructure spending, offers hope for a stronger performance.
