Cement industry records 18-20% volume growth in FY22: report

However, high input costs due to inflationary pressures are driving operating margins down

However, high input costs due to inflationary pressures are driving operating margins down

According to a report, the cement industry is expected to register 18-20% volume-based growth, even surpassing pre-COVID levels by 6% in the current fiscal year.

However, high input costs due to inflationary pressures are driving operating margin down 440-480 basis points to around 19.8-20.2% in fiscal 2022, ICRA said.

“For full-year FY2022, ICRA expects volumetric growth of 18-20% to approximately 355 million tonnes, which is expected to exceed pre-COVID levels by 6%, driven by continued strong demand for rural housing and the pickup in infrastructure activity. ‘ said the report released on Wednesday.

ICRA AVP & Sector Head, Corporate Ratings, Anupama Reddy, said that despite the 5% increase in net sales, operating profit before interest, taxes, depreciation and amortization (OPBITDA) per tonne fell 10% in the first nine months of fiscal 2022 on ₹1,124.

This is “mainly due to the increase in input prices – raw material, energy and fuel and freight costs up 12%, 31% and 5% year-on-year, respectively,” she added.

For the full year, continued high costs would push OPBITDA/MT down 16-18% to ₹1,030-1,050/MT, Ms Reddy said.

According to the report, total Indian cement production in the first 10 months of fiscal 2022 recorded a 25% growth compared to the same period last year to reach 290 million tons.

“It was 4% higher compared to the pre-Covid 10 months of FY2020,” it said.

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