Dalmia Bharat while announcing January-March quarter results on May 10 said that it expects cement demand to follow an upward trajectory due to concerted efforts by the Central Government on infrastructure development and affordable housing. The industry expects to witness less capacity additions in future due to increased entry barriers.
According to analysts at Elara Capital, total house execution in rural area rose by 78% to 3.2 million in FY17 over FY16. Rural execution has tripled since FY15 (1.1 million).
“On the back of a sharp increase in execution, we expect cement demand growth to increase from 2% in FY17E to 7% in FY18E and 8% in FY19E. We expect all-India utilization to have bottomed out in FY17, due to demand recovery and limited capacity addition. We expect North and Central India to regain pricing power. Thus, we prefer companies with a higher presence in North and Central India, such as JK Lakshmi Cement, Heidelberg Cement and Prism Cement,” the brokerage firm said in recent report.
ICRA, research firm, expects cement demand to grow by around 4 to 5% during the financial year 2017-18 driven mainly by the infrastructure segment through housing, road and irrigation projects.
"Going forward, we expect prices to be supported by a marginal improvement in capacity utilisation. The slowdown in new capacity addition and improvement in the supply-demand scenario in FY 2018 should support capacity utilisation levels and thereby cement prices," Icra Ratings Senior Vice President and Group Head Sabyasachi Majumdar said.
However, he also warned that the rising costs continue to put pressure on profitability indicators for cement manufacturers in the coming quarters, the PTI report suggests. CLICK HERE TO READ FULL REPORT.