New Delhi: A recent report from Nuvama Research indicates that cement prices and sales volumes are anticipated to improve in the upcoming months, driven by increased demand and a favorable comparison base.
The report highlights a positive outlook for the cement industry, suggesting that both prices and volumes are expected to rise.
It noted, "We believe the outlook for the cement sector is becoming more optimistic, as both volumes and prices are likely to experience an increase moving forward, supported by a low base from FY25E."
In April 2025, cement prices have increased across all regions, with the southern region experiencing the most significant rise, followed by the eastern, central, northern, and western regions of the country.
This price increase is attributed to enhanced demand. However, dealers anticipate that some of the recent price increases may be partially reversed by the end of the month.
The price surge has been bolstered by a rebound in demand, particularly due to capital expenditures from both central and state governments, as well as Central Public Sector Enterprises (CPSEs). Central government capital expenditure, which had decreased by 12 percent year-on-year in the first eight months of FY25, has shown signs of recovery, increasing by 1 percent in the first eleven months.
Likewise, CPSE capital expenditure, which had fallen by 10 percent in the initial eight months, remained stable for the entire year. Additionally, state government spending has also begun to recover, further enhancing cement demand.
The report anticipates a growth in industry volumes of 7-8 percent during the fourth quarter of FY25. However, for the entire fiscal year, growth is projected to be more modest, around 4-5 percent. This slowdown is attributed to factors such as the upcoming general elections, a decrease in construction activity, and a high comparative base from the previous year.
In FY24, the industry experienced robust volume growth of approximately 9 percent year-on-year. The report notes that a similar pattern was seen in FY20, following the last general elections, when cement volumes fell by nearly 1 percent after achieving a 13 percent growth in FY19.
In summary, while the sector may encounter some immediate challenges, the long-term outlook seems to be improving, with anticipated price increases and stable demand likely to foster growth.
