Moody’s Investors Service is of the view that India will see strong demand for cement in FY23 and FY24. The outlook jacked up shares of cement producers higher on February 17.
At 12:27pm, shares of Shree Cement, UltraTech Cement, Heidelberg Cement India, Ambuja Cements, Ramco Cements, JK Cement, Star Cement, and Sagar Cements were up 2-7 percent on the BSE.
Cement production in India is estimated to grow by around 6-8 percent over fiscal years 2023 and 2024, following a 21 percent jump for the fiscal year ended March 2022, according to a report by Moody’s.
The ratings agency believes that India's infrastructure-led investments, mass residential projects and broad-based economic growth will keep cement demand solid.
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"A growing housing sector, which typically accounts for 60-65 percent of India's cement consumption, will remain a key demand driver. Also, continued large investments in roads and infrastructure projects will fuel cement demand," Moody's said.
Capacity expansion by cement manufacturers is also an indication that the demand scenario looks strong.
Cement major UltraTech Cement announced the commissioning of capacities in Chhattisgarh and Odisha. The company has commissioned 1.30 million tonnes per annum (mtpa) brownfield cement capacity at Hirmi in Chhattisgarh and 2.80 mtpa greenfield grinding capacity at Cuttack in Odisha. This forms part of the on-going capacity expansion, said UltraTech Cement.
Even Shree Cement plans to expand capacity to 80 million tonnes by FY30.
“Cement demand from Govt. projects is expected to increase in 2023; 33 percent increase in infrastructure development capex (Rs 10 lakh crore) in a pre-election year argues well for cement consumption," HeidelbergCement India said in its investor presentation.
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