Analysts, now, opine that the cement industry demand is slowly improving from the disruption created from Covid-19 due to pent up demand and improved rural demand.
CARE Ratings believe rural demand will be the major driver for cement considering monsoons have been favourable in most part of the country and the outlook for Kharif crop too looks promising. This could translate in an inflow of cash in the rural economy which could commensurate in infrastructure creation, thus, augmenting cement demand. On the flipside demand for the commodity has been subdued in urban India.
India's cement industry has shown resilience amid the phase-wise opening up of the economy in a seasonally weak quarter. The volume recovery seen in May and June, driven by strong demand from the rural and semi-urban areas, has largely sustained in 2QFY21 (adjusted for monsoon seasonality).
"2QFY21 is seasonally the weakest quarter of the year due to heavy monsoon rains across most parts of the country. Accordingly, we have seen cement demand decline on a MoM basis since July even this year. However, on a YoY basis, demand recovery seen in June has sustained even in this quarter – a positive for the sector outlook," Motilal Oswal Financial Services said in sector update.