Cement demand growth likely to cool in FY25, benign costs to aid profitability

India's cement industry will see a tapering of demand growth to 6-7 per cent in fiscal 2025 after a third straight year of healthy demand growth at 11 per cent in fiscal 2024 to 441 million tonne (MT).

- NIVEDITA MUKHERJEE

Cement volume growth recovered to a healthy 7-8 per cent on-year in the last quarter of fiscal 2024, on aggressive volume push, after growing 15 per cent on-year in the first half and logging a moderate slowdown in the third quarter due to regional hindrances.

Production of cement, one of the economy's eight infrastructure industries used to measure core sector growth, increased by 6.7 per cent on-year (provisional) in February 2024, as per Government data.

In fiscal 2025, CRISIL Research forecasts a 9-11 per cent correction in power and fuel cost led by softening of pet coke and coal prices. Freight expenditure is also expected to decline 1-3 per cent on the back of lower diesel prices, combined with players' efforts to improve lead distances through aggressive expansions.

According to Nomura, in 4QFY24F, the India cement industry saw a late recovery in demand from both trade and non-trade sectors resulting in strong volume growth. Analyst Jashandeep Singh Chad sees clinker utilisation levels to be 95 per cent for the top six cement manufacturers (in Nomura coverage universe) supported by pre-election demand.