Weakness in tiles industry to exacerbate due to COVID-19: Report

The continuation of lockdown to curtail the spread of COVID-19 in the country is likely to exacerbate the weakness in the tiles industry following low global demand and a prevailing weak domestic demand scenario, according to a report.

The COVID-19 outbreak is expected to further exacerbate the weakness in the domestic demand, following significant negative impact on its end consumer industry, real estate sector, given the expected slowdown in project execution and new launches," Icra Vice-President and Head, Mid-Corporate ratings Suprio Banerjee said quoting the report.

The replacement demand is also expected to remain muted due to weak consumer sentiments, he added.

"Given the demand recovery is expected to be gradual with tile being a discretionary item, domestic sales are likely to be severely impacted in Q1FY21," he opined.

Icra further stated that along with being the largest producer and consumer of the world, China also is the largest exporter.

India ranked fourth after Spain and Italy, while Iran is fifth largest exporter.

During the fourth quarter of FY20, the tiles export from India witnessed a decent jump due to temporary lockdown in China and other major exporting countries.

India's exports stood close to 20 per cent of its total production.

The top 5 export market for India are Saudi Arabia, UAE, Mexico, Iraq and Oman with Gulf Cooperation Council (GCC) countries forming 40-45 per cent of total India's exports.

"Our channel-check suggests that given the relatively lower impact of coronavirus in India's key export destination, demand recovery in export market will be faster compared to the domestic market," Icra said.

Nevertheless, it said, the recent lockdown in India coupled with weak global demand, the export sales are also likely to face headwinds in the first quarter of FY2021.