India's cement production is expected to range between 380-390 million tonnes in FY23, a growth rate of 8-9% YoY, driven by the government's push for infrastructure development and increased real estate activity, according to a report by Care Advisory and Research. Cement production and consumption grew 11% YoY during April-November in FY23. The EBITDA margins of cement players declined almost 10% YoY in H1FY23 due to an increase in power and fuel cost, including a sharp surge in coal prices, and escalation of limestone prices. There has been a 7% YoY increase in wholesale cement prices in H1FY23.
While prices remained flattish in Q3, Care Ratings expects an increase of about ₹15-20/50kg bag in Q4FY23, the seasonally strongest quarter, to partially offset the inflationary pressure. The cement industry is expected to continue its uptrend in volume growth, but profitability of the cement players is expected to decline by 400-500 bps in FY23 due to elevated power and fuel costs.
According to Tanvi Shah, Director of Care Advisory, "The cement industry is expected to see a continued uptrend in volume growth in the near term. In FY23, the volume growth is expected to be around 8-9% owing to renewed demand in the housing and infrastructure segment coupled with the government's continued focus on infrastructure development in light of Central elections in 2024. Despite the uptrend in consumption, the profitability of the cement players is expected to decline by 400-500 bps in FY23 due to elevated power and fuel cost."
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