Cement Giants Line Up Mega Investments To Meet Rising Demand
In a sign that reflects growing confidence in the cement sector, major players have lined up massive capital expenditure totaling an estimated Rs. 1.25 lakh crore between the current financial year and FY27. According to a recent analysis by Crisil Ratings, this planned investment amounts to nearly double the capital spent over the past three years combined.
The bullish investment plans come as cement demand has surged in India, averaging a strong 10% annual growth in the last three years. This uptick has outpaced capacity additions, pushing utilisation levels in FY24 to a decade high of 70%. With demand projected to rise 7% annually through FY29, manufacturers are gearing up to tap into opportunities by significantly expanding capacity. Around 130 million tons of new grinding facilities, representing 25% of present capacity, will be added by leading players during the period.
Stable financials and low debt for most firms means the capex blitz can be largely funded through internal cash flows without imposing major strain. Crisil notes credit profiles will remain stable as companies retain healthy profits while new plants ramp up smoothly. Boosting national presence also appears a key motive behind the aggressive spending strategy, which follows a spate of M&A activity by major conglomerates in cement.
Aiming to capture potential, India's cement sector is priming itself for sustained growth through increased investments over the next few years. With demand stuck in an upward trend and balance sheets in good shape, the industry outlook appears bright.
