As the infrastructure and real estate industry is set to upcycle, CareEdge reports a boost in demand for cement and shares its projection on expected growth.
The cement industry has benefitted from high volume growth, majorly driven by a revival in demand from the housing sectors, upcoming infrastructure projects such as the construction of roads, railways, and highways as well as generous rural demand. The cement sector remains one of the key beneficiaries of economic growth as there is a positive correlation between GDP growth rate & cement demand growth. In the 9MFY23, the overall cement demand registered 11 per cent growth over last year and on a full year basis CareEdge expects 8 per cent to 9 per cent growth. The central government continues to focus on increasing capex outlay to spur growth in light of the 2024 general elections. The capex for 2023-24 (Budget Estimate) at Rs 10 lakh crore is almost 3 times of the capital expenditure in FY2019-20. The capex spree also augurs well with the central government’s aim to make growth more inclusive as investment in infrastructure and productive capacity have a multiplier effect. The public sector capex has focused on improving the connectivity inside the country and gradually the allocation for highways and railways have surged from 35 per cent in FY18 to 43 per cent in FY23. The Union Budget 2024 also increased outlay on railways and plans for 50 new airports.
The combined effect of increasing infrastructure spends, real estate upcycle, low per capita consumption and the expected increase in private sector capex well supports the demand growth for cement in FY24-FY25. CareEdge expects the sales volume for the cement industry to grow by 8-9 per cent in FY23 to 380-385 MT and to 440-450 MT by FY25 year-end with Central and eastern regions witnessing more lucrative demand. Given the demand is expected to remain robust in upcoming years, the cement players have also announced additional capacity to keep up with the growth pace. The cement industry is concentrated with the top 10 players having more than 68 per cent of the installed capacity share. Going forward as well the capacity expansion during FY23-FY25 is expected to be predominantly undertaken by the top players and hence the consolidated nature of the sector is likely to continue. “The sector may also witness acquisition of mid or smaller-sized players by the top players amid the prolonged margin pressure which the sector is witnessing. This will lead to further consolidation in the sector and better pricing discipline amongst remaining players,” said Ravleen Sethi, Associate Director, CareEdge.
Tamil Nadu is set to host one of India’s five national carbon capture and utilisation (CCU) testbeds, aimed at reducing CO2 emissions in the cement industry as part of the country’s 2070 net-zero goal, as per a news report. The facility will be based at UltraTech Cement’s Reddipalayam plant in Ariyalur, supported by IIT Madras and BITS Pilani. Backed by the Department of Science and Technology (DST), the project will pilot an oxygen-enriched kiln capable of capturing up to two tonnes of CO2 per day for conversion into concrete products. Additional testbeds are planned in Rajasthan, Odisha, and Andhra Pradesh, involving companies like JK Cement and Dalmia Cement. Union Minister Jitendra Singh confirmed that funding approvals are underway, with full implementation expected in 2025.
JSW Cement has set the price range for its upcoming initial public offering(IPO) at US$1.58 to US$1.67 per share, aiming to raise approximately US$409 million. As reported in the news, around US$91 million from the proceeds will be directed towards partially financing a new integrated cement plant in Nagaur, Rajasthan. Additionally, the company plans to utilise US$59.2 million to repay or prepay existing debts. The remaining capital will be allocated for general corporate purposes.
As per a news report, Karan Adani, ACC Chair, has said that he expects the cement industry to benefit from the an anticipated US$2.2tn in new public infrastructure spending between 2025 and 2030. In a statement he said that ACC has crossed the 100Mt/yr cement capacity milestone in April 2025, propelling the company to get closer to its ambitious 140Mt/yr target by the 2028 financial year. The company’s capacity corresponds to 15 per cent of an all-India installed capacity of 686Mt/yr.