Now Reading: Cement makers see 7-8% growth despite West Asia headwinds
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Cement makers see 7-8% growth despite West Asia headwinds
Leading cement manufacturers expect the industry to grow 7-8% in FY27, driven by government infrastructure spending, housing demand and urbanisation, according to executives' comments in latest earnings calls. UltraTech Cement CFO Atul Daga said the industry faces headwinds from higher fuel prices, freight costs and import-dependent supply chains due to geopolitical tensions in West Asia, with power, fuel and selling expenses accounting for nearly 50-55% of operating costs.
Ambuja Cements CEO Vinod Bahety projected consolidated volumes to rise around 8% in FY27 to nearly 80 million tonnes, though he expects industry demand growth to remain moderate at 5-5.5% due to inflation and a possible weak monsoon. Companies are stepping up investments: Dalmia Bharat plans Rs 3,200-3,400 crore capex in FY27, UltraTech Rs 8,000-10,000 crore annually over four to five years, Ambuja Cements Rs 6,000-6,500 crore for FY27, and Nuvoco Vistas Rs 900 crore for FY27 and Rs 960 crore for FY28.
Nuvoco Vistas MD Jayakumar Krishnaswamy cautioned that margins may remain under pressure for one to two quarters due to rising fuel, raw material and packaging costs. Shree Cement MD Neeraj Akhoury said geopolitical tensions and forecasts of a moderate monsoon could temporarily impact momentum, though domestic demand fundamentals remain resilient.
Indian Opinion Analysis
The cement industry's 7-8% growth forecast hinges on sustained government capex, which accounts for over half of demand. A weak monsoon or prolonged high crude oil prices could push that range lower. The real risk is cost inflation: fuel and freight are 50-55% of operating costs, and crude above $85 a barrel will compress margins for at least two quarters. UltraTech's Rs 8,000-10,000 crore annual capex signals confidence in urbanisation and affordable housing demand through FY30. Watch the monsoon forecast in June and Brent crude prices through Q2 for directional signals.
Source: millenniumpost.in
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