Cement demand to grow by 4-6 per cent next fiscal: Ind-Ra

Demand for cement is likely to grow by 4-6 per cent in the next financial year, compared to 3 per cent growth estimated this fiscal, on account of government spending in the construction and infrastructure segment, says a report.
Cement demand grew by 5.6 per cent in the last fiscal, according to India Ratings and Research (Ind-Ra). The estimate by the agency for the current fiscal has been revised down from the earlier projection of 6.5-8 per cent.
"Demand for cement (is expected) to grow by 4-6 per cent in FY17, double the growth registered in 2015, on the back of government spending in the construction and infrastructure segment," Ind-Ra said in its latest report.

However, the ratings agency said it does not expect any significant revival in housing demand in either rural or urban areas. This would result in the mid-single digit growth in cement demand.
As per Ind-Ra, cement demand in 2015-16 has been weak due to the slowdown seen across rural and urban housing as well as construction and industrial activities.
Historically, the drivers of cement sector have been infrastructure, construction and real estate sectors.

Going by Ind-Ra estimates, significant recovery is not expected in rural housing demand for the next fiscal due to the after-effects of this fiscal's weak monsoon and subdued growth in the minimum support price (MSP) of agri-products.

Similarly, it does not expect any significant pick-up in urban housing demand as the real estate sector across six major cities (except Kolkata) is still ailing with high inventory levels.
"We expect real estate developers to focus on project completion and consolidate their balance sheets in the near term.
"Completing and delivering projects is also important for them to win back customers' confidence," it added.
On the positive side, Ind-Ra noted that given the government's focus on roads and highways, cement demand could be supported by an uptick in activities by the National Highways Authority of India (NHAI).