Cement sector may post flat 5% growth in FY19: Report

The cement industry is likely to register a flat growth of around 5 per cent in the current financial year despite a pick-up in demand in recent months and healthy outlook ahead, a report said on Monday.

The profitability margins and debt metrics of the cement companies may also come under pressure in the coming quarters on higher petcoke, coal and diesel prices, rating agency ICRA said in its report.

“The cement demand has picked up from Q3 FY18 and the trend is expected to continue in Q4 FY18, but the growth of the industry may remain flat at 5 per cent in FY19,” it said.

ICRA expects the cement demand to show a moderate growth of around 5 per cent in FY18 as well.

“A demand pick-up in the recent months, October 2017 to January 2018 by 13.4 per cent, is backed by low-cost housing in the eastern markets, Andhra Pradesh and Telangana along with the infrastructure demand from the eastern, southern and western markets,” it said.

However, the sand availability issues persist in Rajasthan, Uttar Pradesh, Bihar and Tamil Nadu, which according to the agency, are adversely impacting the demand in these regions.

ICRA said a pick-up in the affordable and rural housing segments and infrastructure — primarily road and irrigation projects — is likely to continue the demand growth momentum of around 5 per cent in FY19.