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Buoyed by the infrastructure-focused Union Budget, cement demand is set for its third straight year of growth, with a 7-9 per cent jump to 425 million tonnes in FY’ 24.

However, the outlook on the operating margin, which has been under pressure, remains clouded with the prices of key inputs – coal and pet coke – remaining elevated, said Crisil Market Intelligence and Analysis.

Cement demand grew 11 per cent year-on-year in the first 10 months of the fiscal, led by a rapid execution in infrastructure projects and strong traction in the real estate and rural affordable housing segments.

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Moody’s forecast cement output during the current fiscal year at over 350 million tonnes and well over 400 million tonnes next financial year.

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Going ahead, the momentum is likely to stay as it is a seasonally strong period for construction activity across regions, it added.

Next fiscal would again see the infrastructure and affordable rural housing segments propelling growth. The highest traction is expected from roads, where the total outlay for the Ministry of Road Transport and Highways and the National Highways Authority of India has risen 25 per cent and 14 per cent.

The outlay for affordable rural housing under the Pradhan Mantri Awas Yojana – Gramin has also grown 12 per cent in a pre-election year.

Hetal Gandhi, Director (Research), Crisil Market Intelligence and Analytics, said strong demand is likely to lead to incremental sales volume of 30-35 million tonnes in FY’24, after a cumulative rise of 68 million tonnes over FY’22 and FY’23.

This translates into demand growth of 30 per cent since FY’21, taking the total volume to 425 million tonnes in FY’24. Demand growth is likely to be starker in the central and eastern regions, which account for over 80 per cent of PMAY-G construction, said Gandhi.

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