The cement industry will look at a robust revival in 2025 with expectations of improvement in sales realisation, higher margins and acceleration in demand. Most brokerage reports indicate that pent-up demand, renewed capex pus, and sustained momentum in the housing sector are going to drive up demand. The fact that cement prices too are holding firm is teh current quarter is also seen as positive.
The sector is also in the midst of consolidation and heightened rivalry between two key corporate houses – UltraTech Cement and Adani-owned Ambuja Cement – snapping smaller players.
According to Motilal Oswal, industry volumes during October- November 2024 grew by 3-5% YoY. This was despite a challenging October affected by unseasonal rains, a high base from the previous year, and the overlap of festive seasons.
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According to JM Financial, the cement industry is set for a revival with industry profitability expected to improve further in Q4FY25. Per the brokerage firm, the key takeaways from various management comments include: 1) demand likely to be at 6-7 per cent CAGR in the next 2-3 years; 2) prices expected to improve gradually with better demand; and 3) industry targeting sustainable cost savings of Rs 150-200/tn over the next 2-3 years.
JM Financial said that the cement demand is expected to remain strong in coming years with a growth of 7-8 per cent CAGR over FY25E-27E. Per the brokerage firm, after a brief slowdown anticipated in FY25, the sector is expected to witness strong growth, driven by positive demand fundamentals and structural changes within the industry. Further, InCred Equities stated that players like UltraTech Cement, Adani Cements (ACC + Ambuja Cements) maintained their positive stance on cement demand in India and expected the industry to grow by an average 7-9 per cent in Q4FY25.
Also, Finance Minister Nirmala Sitharaman, in her Budget speech, announced increased spending on large-scale housing and infrastructure projects, which will drive demand for construction materials including cement, and allow capacity expansion. Cement Manufacturers’ Association (CMA) had too welcomed it maintaining that the increased investments on infrastructure across states amplifies opportunities and avenues for the growth of the cement sector.
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