Indian Cement Industry To See Price Revival In Second Half Of Fiscal 2025
Brokerages expect volume to pick up in the second half due to growth in real estate demand and higher government spending on infrastructure.
The Indian cement sector is likely to remain under pressure, with some revival likely only in the second half of the financial year ending March 2025, according to brokerages.
They stated that the bearish environment, which persisted throughout 2024 due to weak pricing, is likely to continue until the monsoon concludes, as the season keeps cement demand subdued.
Nomura believes that the recent pan-India cement spot price hike by Rs 17 per bag will be rolled back due to the cyclical weak demand during the monsoon.
The Indian cement companies announced a mid-month price hike, with pan-India trade prices rising by Rs 17 per bag to Rs 347 per bag, a 5% and 3% increase from August-start and July-exit prices, respectively.
The south and central regions led the price hikes, with an increase of Rs 25 and Rs 22 per bag, respectively. However, Nomura expects these prices to roll back.
Moreover, the current prices in the second quarter of fiscal 2025 are lower than the average seen in the first quarter ended June 2024. They also stand 5–9% lower than the prices a year ago.
Future Expectations
Most brokerages are positive about the cement industry in the second half of the financial year 2024-2025.
Nuvama Research expects the second half to be better for cement players compared to the first half of fiscal 2025. The brokerage expects volume growth to be in the mid-single digit for the full-year ending March 2025, with volume likely to pick up in the second half due to growth in real estate demand and higher government spending on infrastructure.
IDBI Capital, too, has similar views, with cement volume likely to pick up in the second half of fiscal 2025. The brokerage expects cement demand to grow 5% year on year to 457 million tonne in fiscal 2025. Systematix Institutional Equities anticipates 7-8% industry growth this year.
Factors Supporting Cement Sector
Cement companies' various cost-efficiency initiatives and softening fuel prices could help lessen the negative effects of weak realisations.
The second quarter of fiscal 2025 was marked by significant cost savings on power and fuel costs as cement companies aggressively ramped up their green power and alternate fuel consumption.
Companies also saw their freight costs per tonne decline on the back of lower lead distances, which is the distance between a cement manufacturing plant and the primary market where the cement will be distributed.
