InvestorQ : How do you see the cement demand panning out in the next 12 months? Do you see a build up in cement demand?
Moii Chavate made post

How do you see the cement demand panning out in the next 12 months? Do you see a build up in cement demand?

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Tisha Malhotra answered.
1 month ago
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That could be the big story in terms of macro demand. It is anticipated that the cement demand will increase at the rate of 20% in the next fiscal year FY22. That will however only take the cement demand back to the FY20 levels. Effectively, this growth will ensure that the cement story is back to where it was in the year 2019.

Month after month, we have seen the cement output under pressure except for some exceptional months when the core sector numbers are announced by the MOSPI. The growth in cement demand will be largely support by rural demand including rural housing. In addition, there are plans for a plethora of infrastructure projects in rural segments.

As a result of the growth in volumes, the operating profit margins or the OPM of cement companies are expected to increase to 21% in FY22. The capacity additions to cement during the fiscal will get back to over 20 MTPA compared to just about 15 MTPA in FY21. Cement capacity utilization is expected to increase from 56% to 64% on a yoy basis.

This trend of East India concentration has been visible over the last few quarters. Nearly 80% of the capacity additions will happen in the Eastern region, which will drive cement capacity expansion. Cement producers have however cautioned that the rise in price of diesel and pet coke prices would hike input cost sand necessitate price hikes in the year.

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