Domestic cement sector is expected to post a 6% growth in FY19
The domestic cement sector is expected to post a 6% growth in FY2019 with growth momentum likely to sustain though input costs like power, fuel and freight expenses are likely to put pressure on the operating profitability of cement companies in the coming quarters, ratings agency ICRA has said.
Domestic cement production was higher by 6.3% at 298 million tonnes in FY2018, against 280 million tonnes in FY2017. Most of this growth was recorded during the second half of FY2018 and driven largely by improved demand in key markets, the agency said in its latest report on cement sector.
“We expect demand in FY2019, to be driven by a pick-up in the affordable and rural housing segments and infrastructure, primarily road and irrigation project,” Sabya sachi Majumdar, senior vice president, ICRA Ltd said.
The Budget of FY2019 also supports with higher rural credit, increased Minimum Support Price (MSP), increased allocation for the rural, agricultural and allied sectors, along with continued focus on the Pradhan Mantri Awas Yojana (PMAY) and infrastructure investments, the report said. “Cement demand from rural housing saw a pick-up, post monsoons, following an improvement in the rural economy as a result of normal monsoons,” he added.