During the past few years, growth rate of cement demand has remained

subdued because of many factors few of them namely are: Slow housing
demand, limited infrastructure spending, weak industrial capex and
private sector contribution. However, reversing the short-term impact of
demonetisation and early phase of GST implementation, we expect
cement demand to grow 7%-8 YoY in FY19E/FY20E aided by robust
government measures providing a fillip to the infrastructure sector and
housing for all offsetting sustained weakness in housing and
commercial/industrial capex. Pan-India cement demand is under
pressure since the past few years and cement demand growth remained
subdued, defying the GDP multiplier link (1.2 X in stable market
expanding to 1.3 X during the economic recovery).
Cement demand picked up during 3QFY18 YoY, recovering from the
demonetisation impact and initial phase of GST implementation, growing
by a strong 11.1% YoY. Strong infrastructure push and housing scheme
will be the key factors in driving current growth and is expected to
continue in the near future barring unforeseen events, it is expected that
infrastructure projects will be a major consumer of cement. The efforts of
the Government to improve and execute infrastructure projects would be
the key driver. The country is on high growth track and focus is now on
the development of the infrastructure facilities such as Smart cities,
highway corridors, ports, canals, bridges and power houses etc.

Cement is one of the fundamental elements

for setting up strong and healthy
infrastructure of the country and plays and
important role in economic development and
welfare of the nation. Cement demand in
our country is driven by housing,
infrastructure and industrial construction.
Housing contributes to about 60-65%,
driving demand outlook – 8% CAGR over
Financial Year 2018 driven by Housing for
all initiative. We expect cement demand Source: Cement Industry annual report, Holtec Consulting, India

from housing to post a 9% CAGR over FY19-22E. Housing demand

would be led by the rural segment, which is expected to benefit from
government schemes targeting the construction of c.29mn houses by
2022. Urban housing growth is expected from government schemes
promoting affordable housing. Cheaper availability of funds under the
Credit Linked Savings Scheme (CLSS) scheme would spur cement
growth in the urban areas, especially in economically weak segments
(EWSs) and low income groups (LIGs).
Key players to benefit from government spending on housing

Source: Cement Sector, Nirmal Bang Securities

Government-driven infrastructure creation is a bright spot for cement

industry

 The government is keen on infrastructure development to boost

economic growth with special focus on building and expanding the
road network.
 Infrastructure projects such as dedicated freight corridors (DFCs)
as well as new and upgraded airports and ports are expected to
provide a fillip to construction activity.
 The government intends to expand the capacity of Indian Railways
and provide facilities for handling and storage to facilitate
transportation of cement and reduce transportation costs.
  The government is focused on improving irrigation facilities in
areas where these are lacking to reduce dependency on
seasonality for the agriculture sector.

Source: Cement Sector, Nirmal Bang Securities

Development of metro railway, roads, airports Metro rail projects in

Mumbai, Bengaluru and Hyderabad and the expansion phase in Delhi
are likely to drive cement demand.

 Airport modernisation across major cities is likely to expand the

demand for cement industry.
 The latest development in the Ahmedabad Metro Rail Project has
driven cement demand to a large extent.
Source: Cement Industry annual report, Holtec Consulting, India