Increased govt spending on infra, housing to drive cement volumes in this fiscal

Vijay C Roy

Chandigarh, April 21

High government spending on infrastructure owing to the General Election, rural housing and urbanisation will drive cement sector in the current fiscal year. According to reports, cement volumes are expected to grow by 7 to 9 per cent in the 2023-24 fiscal year, supported by demand from the housing and infrastructure sectors.

Analysts feel the infrastructure push by the government would be the key growth driver like in the past three pre-election years.

“The industry is expecting better growth this year. We expect there would be significant surge in spending especially in the infrastructure and housing sector by the government,” said Madhav Singhania, Deputy Chairman, ClI Northern Region & Deputy MD & CEO, JK Cement Ltd.

Agreeing to his views, experts say continued large investments in roads and infrastructure projects will fuel cement demand. According to India Ratings, another key driver will be the agricultural sector and the focus will be on completing affordable housing projects. Furthermore, in the 2023-24 Union Budget, the government has allocated $1.8 billion for the creation of safe housing, clean drinking water and sanitation, and increasing road and telecom connectivity, among other initiatives that will drive the demand.

According to India Ratings, the demand would grow 8-9 per cent in FY24 over an estimated 9 per cent growth in FY23, giving the sector a five-year compounded annual growth rate of 4.5 per cent. However, the Investment Information and Credit Rating Agency (ICRA) estimates that cement volumes are expected to grow by 8 per cent in the FY23 to around 389 million MT (16 per cent higher than pre-Covid levels of 334 million MT in FY20) and by 7 per cent in FY24 to around 416 million MT.

Fueled by the demand, the ICRA expects the capacity additions to increase to around 30-33 MTPA (million tonne per month) in FY23.