Analysts expect that Indian cement companies are set for a strong revival in the next one or two years. For the first time in five years, capacity addition in fiscal 2014 is expected to be lower than the incremental demand. Compared with earlier expectations, overcapacity is a tad higher this fiscal, but capacity pipeline for the next fiscal is sharply lower, say the analysts.
Cement’s installed capacity growth in the country in the fiscal 2015 is now estimated at 4 per cent yoy versus 8 per cent growth expected earlier, the analysts said in recent report, adding that general elections scheduled in the next 18 months, too, could boost cement demand, say the analysts.
Indicating a cyclical upturn for the sector by the second half of fiscal 2014, Deutsche Bank analysts said that rising capacity utilisations and emerging logistical constraints could impede supply. As a result, industry is likely to be more localised and would benefit all the players, they said.