Indian cement demand expected to rise 6-7% in FY19

India’s domestic cement demand increased 14.2 per cent YoY in the first quarter of FY19 ended 30 June. However, pan-Indian prices fell approximately 5-6 per cent. Furthermore, rising costs are expected to continue to put pressure on profit margins, according to an ICRA report.

"In addition to pricing pressures, higher power and fuel like increase in coal and petcoke prices and freight costs of increase in diesel prices in the near-term are likely to continue to put pressure on the profitability margins and debt metrics of the cement companies," said Sabyasachi Majumdar, senior vice president, ICRA Ratings.

However, the construction sector is expected to support the industry for the rest of the FY19.

“Overall, we expect the demand to show a growth of around 6-7 per cent in FY19, primarily driven by a pick-up in the affordable and rural housing segments and infrastructure, mainly road and irrigation projects, in addition to the low base effect of FY18," said Mr Majumdar.