"We expect the first quarter growth to be about 5% and by the year-end, we would probably see a growth of 7-8%," said Amandeep, director and CEO of OCL India, a listed subsidiary of Dalmia Bharat Group.
Strong signs of revival in the infrastructure indicate that cement demand, a key indicator of state of affairs of the real economy and particularly the infrastructure sector, could double in the current financial year, said the officials of Dalmia Bharat group, one of the leading cement manufacturers in the country.
"We expect the first quarter growth to be about 5% and by the year-end, we would probably see a growth of 7-8%," said Amandeep, director and CEO of OCL India, a listed subsidiary of Dalmia Bharat Group.
After remaining somewhat flat till the third quarter of the last fiscal, the fourth quarter demand pulled up the whole FY16 growth to 4.5%.
"The infrastructure sector is in the early stage of growth and within that we see real demand revival in rural infrastructure and road sectors, after studying on-ground activities. Secondly, with metro-rail network in tier two cities being planned, there could be additional demand for cement within the next two years," Amandeep said during the launch of a premium Dalmia DSP Cement brand in the city, adding that real estate is one of the key sectors yet to see any demand upswing mainly due to significant unsold inventory.
"Cement, which has a strong co-relation with the gross domestic product, used to grow at a multiple of 1.2 of the GDP growth. Over the past few years including FY16, that multiple dropped to 0.8. This year, it looks like it will improve, and whether we come back to 1.2 level or not, a lot of green shoots are now visible," said B K Singh, senior executive director and group head of marketing.
"We would see improvement in offtake from the third quarter onwards which may lead to realisation and hence, profitability."
Amandeep, however, doesn't see much improvement in prices anytime soon due to low current capacity utilisations of around 70%.
"While prices didn't improve much since the last quarter, all cement companies have tried to bring down costs, and with stable and lower pet coke prices, we would see margins in the current as well as the second quarter continuing at levels seen in the fourth quarter," he said.
With capacity pegged at 25-million-tonne-a-year, Dalmia Bharat group has a strong presence in the south, the east and northeastern region.
Dalmia Bharat Ltd has been a darling of investors of late, closing 6.45% up on Tuesday trade.
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