Overall demand conditions likely to remain stable for Indian cement sector: Ind-Ra

Amid a gradual economic growth forecast across cement end-markets, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that the overall demand conditions are likely to remain stable for Indian cement sector.

The rating agency maintained a stable outlook on the sector for the remaining period of current financial year. However, Ind-Ra pointed that rising input costs would impact the EBITDA growth of the companies (earnings before interest, tax, depreciation and amortization), further noting that cement prices have remained stagnant over the last few quarters, despite rising fuel prices.

Ind-Ra also made detailed projections over the region wise capacity utilization. As per the report, capacity utilisation in central region is likely to rise over the medium term, on the back of receding impact of sand mining issues, election season in central region states and improving utilisation level of Jaypee Associates’ assets, while utilisation in the western region is likely to be high, on speeding up of DFCCIL projects, Mumbai metro rail project, and road and irrigation projects, due to the upcoming elections in Maharashtra in September 2019. The agency also expects utilization to move in northward direction in east region.