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COVID-19 impact | Here's why cement sector needs to break out of its concrete cocoon

Cement manufacturers will need to rapidly reinvent their marketing act to compete in a digital marketplace. The more savvy and nimble-footed players will have an edge over their stodgy peers.

September 01, 2020 / 03:07 PM IST
Representative image

Representative image

Five months after the outbreak of COVID-19 and nationwide lockdown, as the economy is still trying to find its feet, one sector that has given some joy to the markets and investors is cement.

The near-instant bounce back of cement sales in May and June after a virtual washout in April 2020 surprised the manufacturers as much as analysts and industry observers. Various factors have been attributed to the recovery–from pent-up demand to pick up in rural housing post a good rabi harvest and availability of labour in villages, thanks to the returning migrants.

In a parched economic landscape, when people are moving around with magnifying glasses looking for green shoots, concrete—of all things—was found to have gathered some moss. This has been reflected in the buoyancy of cement stocks of both large and midcap companies. The industry players have been expressing "cautious optimism" and predicting a return to the growth path in the next fiscal (2021-22).

"Rural demand is likely to help contain the on-year drop in cement sales volume to 12-14 percent this fiscal as against an average annual growth of 6 percent during the last three fiscals," analysts from rating agency Crisil said in an industry research report.