- विज्ञापन -
Demand for cement is projected to increase by 5% in FY25, with further price hikes anticipated in the coming months, according to a Centrum report. Several factors, including delays in government spending following the general elections, excessive rainfall, and flooding in multiple regions, have adversely affected demand. Year-on-year, cement demand has contracted by 5-6%, though recent capacity expansions are expected to lead to a 2.7% growth.
The report notes that demand has been weak across the southern, northern, and central regions, with certain micro markets experiencing more than a 20% year-on-year decline in demand. However, channel checks indicate that many industry participants expect a significant demand recovery in the second half of FY25. Thus, the report projects a 5% growth for the cement sector in FY25.
In Q2 FY25, a 1.5% decrease in cement prices was observed, primarily driven by a 4% quarter-on-quarter decline in the central region. Meanwhile, eastern India showed stable prices, with a slight increase in September due to a weak base. Many cities witnessed their lowest cement prices in the past 3-4 years during this quarter. However, prices that had been declining for several months saw a minor uptick in August and September, with expectations for additional price increases as demand revives.
The report highlights that, although earnings for cement companies have significantly declined due to lower demand and price reductions, with EBITDA expected to decrease to Rs 704/mt (down Rs 159/mt QoQ and Rs 220/mt YoY), there is an anticipated recovery in EBITDA per metric tonne. Demand consolidation in southern India and improved utilization rates in northern India are expected to support price growth for cement companies in the latter part of FY25. The conclusion indicates that with a resurgence in demand and rising prices, cement companies are likely to report improved earnings growth in the second half of FY25.
