Domestic demand for cement in India to grow at CAGR of 7%

S&P Global Ratings estimates cement companies to spend US$14.3b on additional capacity.

Domestic demand for cement in India will grow at a compounded annual growth rate (CAGR) of 7% over the next four years, according to S&P Global.

S&P Global Ratings credit analyst Anshuman Bharati said that this is due to the Indian government planning to spend US$1.7t on infrastructure projects through 2030.

In line with this, Indian cement companies are estimated to spend US$14.3b on additional capacity to make 160-170 million tons of cement annually.

"India will increase its cement capacity by more than 25% by 2028, or at a CAGR of 6%," said Bharati.

"Our assumption that India's cement makers will largely fund their expansion with cash flows and reserves, with very little debt, speaks to the robust fiscal health of these entities," he added.

However, industry leverage will remain below the 10-year median, even if EBITDA were to remain 20% lower than the S&P Capital IQ consensus estimate.

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