Indian Cement Sector Set for Strong Recovery in H2 of FY25

Mumbai, Dec 20 (NationPress) The Indian cement sector is anticipated to witness a significant recovery in the second half of FY25, propelled by pent-up demand, a resurgence in government capital expenditure, and continued strength in the real estate and housing sectors, as outlined in a report by Motilal Oswal Financial Services Ltd. (MOFSL) on Friday.

During the months of October and November 2024, industry volumes saw an increase of 3-5 percent year-on-year (YoY), even in the face of a challenging October due to unseasonal rains, a high base from the previous year, and overlapping festive periods.

Significantly, November recorded a remarkable 20-22 percent YoY growth.

For the second half of FY25, volume growth is expected to be around 8-9 percent YoY, with a strong beginning anticipated for FY26 in the March-June timeframe, which is typically the peak consumption period, according to the MOFSL report.

Among the top sector picks is Ambuja Cements (ACEM), among others.

Cement prices remained mostly stable on a month-on-month basis in November. Historically, realizations in the second half have trended downwards by 1-6 percent compared to the first half over the period of FY13-24.

On the cost front, imported petcoke prices saw an increase of 3-5 percent (month-on-month) in November, whereas prices for imported coal from South Africa remained steady.

The report also mentioned that costs for imported petcoke were at Rs 1.20/Kcal, while South African coal was at Rs 1.65/Kcal.

With lower fuel prices, cement spreads are projected to improve by Rs 25-30 per tonne in the second half of FY25 compared to the first half.

EBITDA per tonne is expected to rise by 23 percent sequentially during this period, supported by slight realization gains, favorable operating leverage, and cost optimization strategies, including enhanced use of green energy, alternative fuels, and improved logistics efficiency.

According to the report, “The Indian cement sector will remain structurally resilient, with robust demand fundamentals and enhanced cost structures.”