Cement industry to witness 18-20% volume growth in FY22: Report

According to a report, the cement industry might witness 18-20% volume-based growth and exceed pre-Covid-19 levels by 6% in the current fiscal year.

Investment Information and Credit Rating Agency (ICRA) said that the high input costs on account of inflationary pressure resulted in a decline in operating margins by 440-480 basis points (bp) to around 19.8-20.2% in FY22.

For FY22, ICRA expects 18-20% volume-based growth to around 355 million metric tonnes (mt), which will surpass the pre-Covid levels by 6%, driven by robust rural housing demand and pick-up in infrastructure activity.

Assistant Vice President (AVP) and Sector Head of IRCA, Anupama Reddy, told the media that despite the increase in the net sales by 5%, the Operating Profit Before Interest, Taxes, Depreciation and Amortisation (OPBITDA) per metric tonne declined by 10% year-on-year (YoY) in the first nine months of FY22 to Rs 1,124.

She said that it is primarily due to increasing input costs, the raw material, power and fuel and freight expenses which are higher by 12%, 31% and 5% YoY, respectively. For 2022, the continued elevated costs would push down the OPBITDA per mt by 16-18% to Rs 1,030-1,050 per mt.

As per the report, all-India cement production witnessed 25% growth at 290 million mt in the first ten months of FY22, compared to the same period a year ago. It was up by 4%, compared to pre-Covid-19 pandemic levels of ten months of FY20.

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