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India Gazette
07-07-2025
- Business
- India Gazette
Cement makers to regain decadal average profitability in 2025-26 over demand revival: Crisil
New Delhi [India], July 7 (ANI): Growth in India's cement demand will recover to 6.5-7.5 per cent this fiscal (2025-26) after falling to 5 per cent in the recently concluded 2024-25 fiscal, according to a Crisil Ratings report. This, coupled with an uptick in realisations, will lift operating profitability by Rs 100 to a level just above the decadal average, the rating agency asserted in its report on Monday. Healthy accrual coupled with robust balance sheets will keep the credit profiles of cement makers stable, a Crisil analysis of 17 cement companies, accounting for over 85 per cent of domestic sales volume, found. Last fiscal, cement demand hit a soft patch in the first half and reported a tepid growth of 2-3 per cent owing to a slowdown in construction activities due to the general elections and erratic monsoon. However, there was a recovery in the second half, leading to annual demand growth of 5 per cent. Sehul Bhatt, Director, Crisil Intelligence, 'This fiscal, cement demand will be driven by a 7-8 per cent growth in the rural housing segment, which accounts for a third of the domestic demand.' 'Indeed, rural housing demand will replace the infrastructure segment as the primary demand driver this fiscal, owing to expectations of a rise in agricultural income on a likely healthy monsoon. Higher disposable income on account of lower interest rates and tax cuts, as well as benign inflation, will also support rural housing demand,' added Bhatt. On the other hand, the infrastructure segment, the second-largest contributor to cement demand with a 30 per cent share, is expected to grow at a relatively slow but steady pace, owing to the lower awarding of national highway projects in the previous two fiscal years and muted capital outlay growth for railways. Meanwhile, cement prices witnessed a healthy uptick in the first quarter of the current fiscal and are expected to rise 2-4 per cent this fiscal after two consecutive years of price lull, the rating agency said today in its report. Anand Kulkarni, Director, Crisil Ratings, 'Along with higher demand, a recovery in realisations, amid stable costs, will lift the operating profitability of cement makers to Rs 975-1,000 per tonne this fiscal against Rs 880 per tonne last fiscal and the decadal average of Rs 965 per tonne.' 'Increasing proportion of competitively sourced green energy in the power mix will lead to some savings in power and fuel costs. This will support profitability by offsetting the Rs 20-30 per tonne rise in raw material prices due to higher cost of limestone, fly ash and slag,' added Kulkarni. The resultant increase in cash accrual, according to Crisil Ratings, will reduce reliance on external borrowings to fund capital expenditure. 'That said, an extended monsoon impacting construction activity or lower infrastructure spend, which can affect demand, and any adverse movement in commodity and energy prices owing to global geopolitical tensions, which may dent profitability, will bear watching,' the rating agency concluded. (ANI)
Hans India
07-07-2025
- Business
- Hans India
India's cement industry to clock higher profit in FY26 as demand firms up: Report
New Delhi: Growth in India's cement demand will recover to 6.5-7.5 per cent during the current financial year after falling to around 5 per cent in 2024-25. This, coupled with an uptick in realisations, will lift operating profitability by about Rs 100, to a level just above the decadal average, according to a Crisil report released on Monday. Healthy accrual coupled with robust balance sheets will keep the credit profiles of cement makers stable, the report states. The Crisil analysis is based on data from 17 cement companies, accounting for over 85 per cent of domestic sales volume. During the last financial year, cement demand hit a soft patch in the first half and reported a tepid growth of 2-3 per cent owing to a slowdown in construction activities due to the general elections and an erratic monsoon. However, there was a recovery in the second half leading to an annual demand growth of around 5 per cent. Crisil Intelligence director Sehul Bhatt said, 'This fiscal, cement demand will be driven by a 7-8 per cent growth in the rural housing segment, which accounts for a third of the domestic demand. Indeed, rural housing demand will replace infrastructure segment as the primary demand driver this fiscal owing to expectations of rise in agricultural income on a likely healthy monsoon. Higher disposable income on account of tax cuts and benign inflation will also support rural housing demand.' On its part, the infrastructure segment, the second-largest contributor to cement demand with around 30 per cent share, is expected to grow at a relatively slow, but steady pace owing to lower awarding of national highway projects in the previous two fiscals and muted capital outlay growth for railways. Meanwhile, cement prices witnessed healthy uptick in the first quarter of the current fiscal and are expected to rise 2-4 per cent this fiscal after two consecutive years of price lull. Crisil Ratings director Anand Kulkarni said, 'Along with higher demand, a recovery in realisations, amid stable costs, will lift the operating profitability of cement makers to Rs 975-1,000 per tonne this fiscal against around Rs 880 per tonne in the last fiscal and the decadal average of around Rs 965 per tonne. Increasing proportion of competitively sourced green energy in the power mix will lead to some savings in power and fuel costs. This will support profitability by offsetting the Rs 20-30 per tonne rise in raw material prices due to higher cost of limestone, fly ash and slag.' However, an extended monsoon impacting construction activity or lower infrastructure spend, which can affect demand, and any adverse movement in commodity and energy prices owing to global geopolitical tensions, which may dent profitability, will bear watching, the report added.
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Business Standard
06-07-2025
- Business
- Business Standard
Price hikes and improved demand to aid cement firms' Q1 FY26 profit
Cement prices rose 6% YoY in Q1 FY26 while moderate volume growth and soft fuel costs are expected to aid profitability despite seasonal monsoon impact Mumbai Listen to This Article Year-on-year (YoY) improvements in cement prices and demand on a low base are likely to aid the profitability of major cement companies in the first quarter of the financial year 2026 (Q1 FY26), even as seasonal weakness has been observed, particularly due to the monsoon in June. 'Realisations are expected to inch up 1–2 per cent sequentially and on-year, driven by the increase in cement prices,' said Sehul Bhatt, director, Crisil Intelligence. According to Elara Capital, pan-India average cement prices rose by about 6 per cent YoY and 3 per cent quarter-on-quarter (QoQ) in Q1 FY26 to ₹377 per bag.
Time of India
22-04-2025
- Business
- Time of India
Cement demand to rise 6.5-7.5% in FY26 on higher infra spending, rural housing boost: Report
New Delhi: Cement demand in India is expected to grow 6.5-7.5 per cent in the current fiscal, driven by a nearly 10 per cent rise in budgetary allocation for core infrastructure ministries and expectations of an above-normal monsoon supporting rural housing , according to Crisil Intelligence . In FY25, demand growth was moderate at 4.5-5.5 per cent due to a slow start to the year amid general elections, a well-distributed monsoon that impacted construction activity , and a high base from the previous three years. Additionally, weak state government spending and a sluggish real estate market affected project execution and urban housing. "Infrastructure, which accounts for 29-31 per cent of domestic cement demand, is expected to remain a key driver in FY26," said Sehul Bhatt, Director, Crisil Intelligence. 'Budgets of 12 states, accounting for 63-65 per cent of Indian cement demand, show an 11 per cent increase in total allocations. The government's focus on specialised rail corridors and tourism is expected to further bolster demand.' Rural housing is projected to continue dominating cement consumption with an estimated share of 32-34 per cent. A favourable monsoon is expected to increase agricultural profitability, supporting housing demand. Programmes such as PMGSY and MNREGA with increased allocations will also support rural demand. The Pradhan Mantri Awas Yojana – Gramin is expected to see a higher pace of execution due to increased sanctions and under-construction units. Rural wages, estimated to have increased 25 per cent in FY25, are expected to remain elevated. The urban housing segment, which faced challenges in FY25, is likely to improve this year due to a low base, possible interest rate cuts, and faster execution under the Pradhan Mantri Awas Yojana – Urban, which has seen a 45 per cent rise in allocation in the 2025-26 Union Budget. The industrial and commercial segment, which accounts for 13-15 per cent of cement demand, is expected to grow steadily, aided by commercial real estate and warehousing. The segment had slowed in FY25 due to moderation in private capex. 'A demand surge is anticipated across segments, driven by increased capex allocations for infrastructure and housing ministries,' said Sachidanand Choubey, Associate Director, Crisil Intelligence. 'This is expected to support a price rise in FY26, following a two-year lull. We estimate a 2-4 per cent price increase as companies focus on improving realisations.'
Time of India
22-04-2025
- Business
- Time of India
Cement demand may rise 6.5-7.5% in FY26: Crisil
NEW DELHI: The cement sector is expected to see a 6.5-7.5% demand growth in the financial year 2025-26, according to Crisil Ratings The demand is expected to be driven by a 10% rise in budgetary allocation for core infrastructure ministries and on expectation that an above-normal monsoon will boost agricultural profitability, in turn lifting rural housing demand . In FY25, cement demand growth was moderate at 4.5-5.5% owing to a sluggish start to the year because of the general elections, spatially well-distributed monsoon that impacted construction along with high base of past three fiscals. Weak state government spending in the first half also slowed pace of project execution and a slow real estate market impacted urban housing. Sehul Bhatt, director, Crisil Intelligence said, "Budgets of 12 states, accounting for 63-65% of Indian cement demand, reveal a substantial 11% increase in total allocations for the current fiscal. The enhanced investment is expected to stimulate cement demand, driving growth of 7.5-8.5% from the infrastructure sector." Rural housing will continue to dominate cement consumption, with an estimated share of 32-34%, as a healthy monsoon season is expected to boost agricultural income, which will create housing demand. The pace of execution is expected to pick up under the Pradhan Mantri Awas Yojana – Gramin, with a rise in sanctions and more under-construction units. The urban housing segment, which faced headwinds in fiscal 2025 due to sluggish real estate, is expected to regain momentum in the current fiscal, owing to a low base, interest rate cuts and improved execution pace under Pradhan Mantri Awas Yojana – Urban. Sachidanand Choubey , associate director, Crisil Intelligence said, "A demand surge is anticipated across segments, driven by increased capex allocations for infrastructure and housing ministries. This uptick is expected to support a price rise in fiscal 2026, following a two-year lull." The industrial and commercial segment, which accounts for 13-15% of the domestic cement demand, is expected to see a steady growth this fiscal, driven by traction from commercial real estate and warehousing . Following three years of strong growth, the segment had slowed down in fiscal 2025 owing to moderation in private capex growth.
