Cement sector: 5 Key reasons why India Ratings maintains a neutral outlook for FY25 despite healthy demand
ACC, Ambuja Cements share prices have risen 23-46% in a year indicating strong investor confidence amidst firm demand outlook. India Ratings and Research however has maintained a neutral outlook on the cement sector for FY25.
Amidst healthy demand outlook for FY25 India Ratings says that costs hold key to profitability of Cement producers. India Ratings expects cement demand to grow 5%-7% year-on-year for FY25.
This is lower than estimated 9% in FY25 Although robust infrastructure demand and a steady demand from the housing and commercial segments would support growth for cement demand, the pace of growth in most segments would be lower than FY23-FY24 levels, said India Ratings. Further the rating agency adds that Risk also emanate in case of a lower or uneven monsoon which could affect rural spending.
The real wage growth in past few years have remained muted as per India Ratings Also Read- Paytm falls for 10th day in a row to hit new all-time low, longest losing streak since listing; what's behind the crash? FY25 is set to witness highest capacity addition since FY10 and per India Ratings and hence Capacity utilisations are expected to remain Below 70%. Cement producers anticipating strong cement demand in the medium term have planned significant capacity additions.
Also Read- UltraTech, Ambuja, ACC, others: Muted April Cement sales, prices add to caution India Ratings believes around 75% of the announced expansion of around 160 million tonnes is actually likely to come on stream over FY24-FY26, with around 45mnt of capacity likely to come on stream in FY25 itself. In central India, the large supply pipeline is likely to weigh on the otherwise strong utilisations over the near term , expects India Ratings, while the
. Read more on livemint.com
