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Cement sector to stage demand, earnings recovery: Brokerages

The cooling of fuel costs and the Union government’s construction spree in the run-up to the 2024 general elections are expected to help margins and volumes.

November 29, 2022 / 08:44 AM IST
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Demand is likely to revive in the cement sector in the coming months, along with an uptick in earnings, following a weak September quarter with decade-low operating margins because of higher energy prices due to the Russia-Ukraine conflict, said analysts.

Analysts believe the demand recovery will be led by the expected pre-general election spending by the government during the next fiscal. Also, energy prices have softened in the past few months, which will help reduce costs, analysts added.

Under the Pradhan Mantri Awas Yojana (PMAY)‐Gramin, the government plans to construct 27.2 million houses before the 2024 general elections. Till date, 20.6 mn houses have been constructed (76 percent of the target), while another 4.2 mn have been sanctioned and are under construction. Under PMAY‐Urban, 6.1 mn houses have been constructed (51 percent of the targeted 12 mn), while 34 percent of the houses are in various stages of construction. A total of 4.3 mn homes (2.4 mn rural and 1.9 mn) are yet to be sanctioned.

Business Standard reported on Monday that the government is looking to allocate an additional Rs 28000 crore for the flagship rural housing programme, PMAY-Gramin this fiscal year to ensure completion of the targeted dwellings before the next general election in 2024.