Cement industry set for robust growth in FY23 and beyond: CareEdge

Cement volumes are anticipated to grow 8- 9 in FY23 to 380- 385 million tonne( MT), driven casing demand, both pastoral and civic, and structure sector, CareEdge Conditions said in a report. “ The concerted effect of adding structure spends, real estate upcycle, low per capita consumption and the anticipated increase in private sector capex well supports demand growth for cement in FY24- FY25," it added.

CareEdge expects cement deals volume to grow to 440- 450 MT by end of FY25, with central and eastern regions witnessing advanced demand. “ Given the demand is anticipated to remain robust in forthcoming times, cement players have also blazoned fresh capacity to keep up with the growth pace," it added.

The Union Budget for FY24 marks the third successive time in which the government has increased budget allocation for crucial structure sectors, reflecting its commitment to structure- led growth. Government spending on structure and casing demand in the run up to 2024 general election paints an encouraging picture of cement consumption. Despite brewing cost challenges, similar as energy prices straining perimeters, cement players are on an expansion spree and anticipated to add 85- 100 MT by FY25.

The assiduity is likely to add 30- 32 MT by the end of the current financial, compared to 25 MT in FY22. The total installed capacity is anticipated to stand at 595MT. For FY24- 25, incremental demand is anticipated to be 55- 60 MT, against which 60- 70 MT of capacity is anticipated to be added in the coming two times, performing in capacity utilisation remaining range- bound at 66- 68 for the assiduity.

“ The robust capacity addition plans by players for FY23- FY25 are leading to fresh capacity to be at 1-1.1 x of the anticipated incremental demand of 90 MT during the same period. This is anticipated to keep the assiduity’s capacity application( grinding) under check, and they're doubtful to ameliorate beyond 67- 69% despite a better demand outlook. still, going forward any variation in the demand motorists amid the forthcoming capacity expansion will remain a crucial monitorable," it said.

The top 10 players in the assiduity have further than 68% of the installed capacity share. Going forward as well, capacity expansion during FY23- FY25 is anticipated to be generally accepted by top players and hence the consolidated nature of the sector is likely to continue.

“ The sector may also witness accession of medial or lower- sized players by the top players amid the prolonged periphery pressure which the sector is witnessing. This will lead to farther connection in the sector and better pricing discipline amongst remaining players," said Ravleen Sethi, associate director, CareEdge.