Infra push to boost cement firms
Infra push to boost cement firms
Industry hopes to grow at 7-8% in FY15 on demand from new projects, realty revival
The cement sector is expected to swing back to growth of 7-8 per cent in 2014-15 with the new government's focus on execution of infrastructure projects and rural housing.
Experts said that once execution of infrastructure projects starts, demand will be back in the sector. Moreover, poor monsoon has helped cement companies to hold on to their prices as construction activities continued even during July, which is considered to be the peak of monsoon. In 2013-14, the sector witnessed a meagre growth of around three per cent.
Vinod Juneja, managing director of Binani Cement, said, "The growth of the sector will mainly come from the NHAI projects and also from re-vamping of railway tracks which would require lot of cement."
Juneja said if the highway and rail projects get executed cement companies would witness at least 15 to 20 per cent additional demand and the profit of the companies would also improve significantly.
Apart from gaining from the execution of infrastructure projects the cement sector is also witnessing demand due to delayed monsoon and scanty rainfall as construction activities are continuing. Cement prices, which start correcting from early June with the advent of monsoon, continued to rise even in the month of July in certain locations.
"Every year during monsoon construction activities come to a halt but this year with delayed monsoon construction activities kept continuing. Cement companies in the western and southern regions even increased prices by around Rs 10 per 50 kg bag in July, while in the north and east prices have remained stable," said a senior official from Cement Manufacturer's Association.
The sector is expected to witness growth of around 6-7 per cent in 2014-15 as construction activities are expected to pick up from the second half of the year.
Infrastructure development, which has suffered due to slow approvals, disputes and scandals in the past, was a key plank of the budget. The government has committed 8,500 kms of highways in the current financial year, three times more than the best achieved in any year. The government also promised expressways around industrial corridors and new airports.
"Infrastructure is estimated to require over $1 trillion in investments during the 12th five-year plan period ending 2017. The sector has, however, suffered in the recent past due to a host of reasons, including difficulties in getting project clearances, some judicial interventions and also higher interest rates," Juneja added.
Analysts too believe that cement sector will witness demand growth of around 7-8 per cent in the current financial year.
Ravi Sodah, an analyst at Elara Capital, said, "All the initiatives taken by the government to improve infrastructure and focus on rural housing would boost cement demand. Further a low base of only 3 per cent growth in 2013-14 would help the sector to report improved growth."
Nitin Bhasin, an analyst at Ambit Capital also said, the sector would witness around 7-8 per cent growth while cement prices are also expected to grow by around 8 per cent on the back of improved demand. Eventually profits of cement companies in 2014-15 will also improve. Government's focus on rural housing and infrastructure would drive growth of the sector, he added.
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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Industry hopes to grow at 7-8% in FY15 on demand from new projects, realty revival
The cement sector is expected to swing back to growth of 7-8 per cent in 2014-15 with the new government's focus on execution of infrastructure projects and rural housing.
Experts said that once execution of infrastructure projects starts, demand will be back in the sector. Moreover, poor monsoon has helped cement companies to hold on to their prices as construction activities continued even during July, which is considered to be the peak of monsoon. In 2013-14, the sector witnessed a meagre growth of around three per cent.
Vinod Juneja, managing director of Binani Cement, said, "The growth of the sector will mainly come from the NHAI projects and also from re-vamping of railway tracks which would require lot of cement."
Juneja said if the highway and rail projects get executed cement companies would witness at least 15 to 20 per cent additional demand and the profit of the companies would also improve significantly.
Apart from gaining from the execution of infrastructure projects the cement sector is also witnessing demand due to delayed monsoon and scanty rainfall as construction activities are continuing. Cement prices, which start correcting from early June with the advent of monsoon, continued to rise even in the month of July in certain locations.
"Every year during monsoon construction activities come to a halt but this year with delayed monsoon construction activities kept continuing. Cement companies in the western and southern regions even increased prices by around Rs 10 per 50 kg bag in July, while in the north and east prices have remained stable," said a senior official from Cement Manufacturer's Association.
The sector is expected to witness growth of around 6-7 per cent in 2014-15 as construction activities are expected to pick up from the second half of the year.
Infrastructure development, which has suffered due to slow approvals, disputes and scandals in the past, was a key plank of the budget. The government has committed 8,500 kms of highways in the current financial year, three times more than the best achieved in any year. The government also promised expressways around industrial corridors and new airports.
"Infrastructure is estimated to require over $1 trillion in investments during the 12th five-year plan period ending 2017. The sector has, however, suffered in the recent past due to a host of reasons, including difficulties in getting project clearances, some judicial interventions and also higher interest rates," Juneja added.
Analysts too believe that cement sector will witness demand growth of around 7-8 per cent in the current financial year.
Ravi Sodah, an analyst at Elara Capital, said, "All the initiatives taken by the government to improve infrastructure and focus on rural housing would boost cement demand. Further a low base of only 3 per cent growth in 2013-14 would help the sector to report improved growth."
Nitin Bhasin, an analyst at Ambit Capital also said, the sector would witness around 7-8 per cent growth while cement prices are also expected to grow by around 8 per cent on the back of improved demand. Eventually profits of cement companies in 2014-15 will also improve. Government's focus on rural housing and infrastructure would drive growth of the sector, he added.
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
--
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To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups.com.
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