Cementing Your Portfolio With The Cement Stocks

With loads of happening around the infrastructure, housing and constructions space in the country, cement stocks are showing their strength in terms of climbing higher, every session. And then there are merger and acquisitions related talks within the industry. Put together, cement stocks are looking a good bet at this time-- how.

- Lohit Bharambe

INTRODUCTION

India is the second largest producer of cement in the world. The sector is a vital part of its economy, providing employment to more than a million people, directly or indirectly.

The real estate development industry currently contributes at least 9 per cent to India’s gross domestic product (GDP). At the same time, the value of robust processes and new policy reforms such as awarding infrastructure status to affordable housing, RERA and GST will help in unlocking the full potential of the sector, as an industry as well as an investment option. With RERA, GST and demonetisation, 2017 will be one of the most crucial years for the sector. The construction industry is in a transition phase and it is fully prepared to take ahead what has begun and consolidate into a sector that is transparent, accountable, professional and financially viable.

India has a lot of potential for development in the infrastructure and construction sectors and the cement sector is expected to largely benefit from it.

India's cement demand is expected to reach 550-600 million tonnes per annum (MTPA) by 2025. The housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the total consumption in India. The other major consumers of cement include infrastructure at 13 per cent, commercial construction at 11 per cent and industrial construction at 9 per cent.

CONSTRUCTION BOOST

On February 1, the government announced increased budgetary allocation for sectors including highways, railways and other infrastructure, which are the biggest consumers of cement.