Moody’s Forecasts Strong Cement Demand for India in FY23 and FY24, Cement Shares Soar
Moody’s Investors Service, a leading ratings agency, predicts that India will experience a robust demand for cement in fiscal years 2023 and 2024. The upbeat forecast has boosted the shares of cement producers significantly on February 17.
As of 12:27 pm, the BSE showed that the shares of leading cement producers such as Shree Cement, UltraTech Cement, Heidelberg Cement India, Ambuja Cements, Ramco Cements, JK Cement, Star Cement, and Sagar Cements have surged by 2% to 7%.
According to Moody’s report, cement production in India is expected to grow by 6-8% during the two fiscal years, following a significant 21% jump in the fiscal year that ended in March 2022. The ratings agency believes that India’s infrastructure-focused investments, large residential projects, and broad-based economic growth will maintain robust cement demand.
Moody’s added that the country’s thriving housing sector, which traditionally accounts for 60-65% of cement consumption, will continue to be a crucial driver of demand. The agency also highlighted that substantial investments in infrastructure projects and roads will further drive the cement market.
The expansion of cement manufacturers’ capacity also signifies a positive outlook for the demand scenario.
UltraTech Cement, one of the top cement producers, announced the commissioning of new capacities in Chhattisgarh and Odisha. The company has installed 1.30 million tonnes per annum (mtpa) brownfield cement capacity at Hirmi in Chhattisgarh and 2.80 mtpa greenfield grinding capacity at Cuttack in Odisha. The expansion is part of the ongoing capacity expansion of the company.
Meanwhile, Shree Cement is planning to boost its capacity to 80 million tonnes by FY30, indicating its confidence in the growth potential of the Indian cement market.
HeidelbergCement India, in its investor presentation, stated, “Cement demand from Govt. projects is expected to increase in 2023; 33 percent increase in infrastructure development capex (Rs 10 lakh crore) in a pre-election year argues well for cement consumption.”
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