Cement Sector Healthy Growth But Constricted Margins

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Brickwork Ratings analysis of the cement sector reports that demand will drive healthy growth but, the price rise will restrict contraction in margins despite expected high input costs in FY22 Industrial Sector Analysis Cement demand, after having declined in FY20 (-1%) and FY21 (-11%), is expected to see healthy 10-12% growth in FY22 owing to a faster-than-expected recovery in the housing sector and the government’s thrust on infrastructure spending in the country. Pent-up demand and low-interest rates have driven the realty sector amid the pandemic, and, the government’s push towards big-ticket infrastructure projects has increased the growth momentum for the highways sector. An improvement in these two sectors, which are among the largest consumers of cement, indicates a strong recovery path for the cement sector. The growth momentum is likely to continue, and production is expected to grow by lower double digits in FY23.

Cement demand growth to be led by a robust recovery in housing and infrastructure
Cement prices to rise in FY22 on account of robust demand and input cost pressure
The profitability of cement players may be hit by rising input costs; increase in realisation to restrict margin contraction

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Tags : Interviews growth Cement Sector Demand Profitability Brickwork Ratings Housing and Infrastructure Industrial Sector