Rating agency Icra in its latest report has said that it expects the all-India cement production in current financial year (FY22) at 332 million tonne, up 12 per cent from last year supported by pent-up demand, rural housing requirement and pickup in infrastructure activity. It stated domestic cement production during Apr-Aug FY22 stood at 142 million tonne, up 44 percent on year-on-year basis and up 2 per cent compared to pre-covid levels (5M FY2020).
The rural housing demand is expected to be supported by the robust kharif harvest and continued healthy procurement, supporting farm income. In FY2023, the production is expected to grow 8 percent to around 358 million tonne. The significant pick up in the infrastructure activity backed by the National Infrastructure Pipeline (NIP) is likely to see healthy traction in terms of new project awards and execution in the medium term, which is expected to boost cement demand.
With regard to profitability of cement companies, while the input costs remain elevated in Q1FY22, Icra’s sample of 12 listed cement companies, reported the highest ever OPBIDTA per tonne in the quarter under review at Rs 1,372 per tonne driven by an increase in net sales realisation and cost optimisation measures undertaken.
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