Indian cement makers will outperform over next 12-18 months: Moody's

/2 min read

ADVERTISEMENT

Large investments in roads and infrastructure projects will fuel cement demand, says Moody's.
Indian cement makers will outperform over next 12-18 months: Moody's
India's cement production will climb by around 6%-8% over fiscal years 2023 and 2024. Credits: Getty Images

India's infrastructure-led investments, mass residential projects and broad-based economic growth will keep cement demand solid, according to Moody's Investors Service.

The country's cement production will climb by around 6%-8% over fiscal years 2023 and 2024, following a 21% jump for the fiscal year ended March 2022, the ratings agency says in a report.

"A growing housing sector, which typically accounts for 60%-65% of India's cement consumption, will remain a key demand driver. Also, continued large investments in roads and infrastructure projects will fuel cement demand," Moody's says.

India built 12,000 kilometres of highways in 2022 alone and this momentum will likely continue in 2023 and 2024, supported by various government initiatives, the report says.

Fortune India Latest Edition is Out Now!
India's Top 100 Billionaires

August 2025

As India continues to be the world’s fastest-growing major economy, Fortune India presents its special issue on the nation’s Top 100 Billionaires. Curated in partnership with Waterfield Advisors, this year’s list reflects a slight decline in the number of dollar billionaires—from 185 to 182—even as the entry threshold for the Top 100 rose to ₹24,283 crore, up from ₹22,739 crore last year. From stalwarts like Mukesh Ambani, Gautam Adani, and the Mistry family, who continue to lead the list, to major gainers such as Sunil Mittal and Kumar Mangalam Birla, the issue goes beyond the numbers to explore the resilience, ambition, and strategic foresight that define India’s wealth creators. Read their compelling stories in the latest issue of Fortune India. On stands now.

Read Now

In the Union Budget 2023-24, the government has allocated $1.8 billion for the creation of safe housing, clean drinking water and sanitation, and increasing road and telecom connectivity, among other initiatives. The government has also allocated $9.6 billion to address urban housing shortages.

While cement demand remained solid in the world's second-largest cement market for most of fiscal 2023, profitability slid sharply, largely owing to elevated costs of pet coke, coal and diesel. A sequential, quarter-on-quarter, decline in these costs will prevent a further sharp decline in profitability, the ratings agency notes.

Moody's, however, says a return to the unusually high profits cement producers enjoyed in FY22 is highly unlikely. "For instance, EBITDA margin for leading, pan-India cement producer UltraTech Cement Limited (Baa3 stable), will fall to about 18% in FY 2023 and around the 20% mark in FY 2024, after reaching 23%-26% for FY20-22," it says.

"Following the acquisition of Holcim Ltd.'s (Baa1 stable) Indian cement operations by Adani Group, several cement producers announced new capacity additions totaling 60 million tonnes that will likely keep capacity utilization under 70% and prevent sharp price increases," according to Moody's.

Earlier this month Finance Minister Nirmala Sitharaman said the government would look at the industry's demand for cutting the 28% Goods and Service Tax (GST) rate for cement. During a post-budget interaction with the Confederation of Indian Industry (CII), the FM said the issue of a possible reduction in the GST rate on cement could be taken to the fitment panel of the GST Council.

On February 7, Ambuja Cements reported a 13.2% year-on-year jump in consolidated net profit to ₹487.88 crore for the quarter ended December 2022, as against ₹430.97 crore in the year-ago period. The company's revenue from operations rose 3.7% to ₹7,906 crore in the third quarter compared with ₹7,625.28 crore in the year-ago period. Earnings before interest, taxes, depreciation and amortisation (EBITDA) of the Adani group's building materials arm stood at ₹1,138 crore as against ₹1,213 crore in the corresponding period a year ago. EBIT margin fell to 14.6% in Q3 FY23 from 16.2% in the year-ago quarter.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.