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 The Indian cement industry is projected to see a robust recovery in the second half of FY25, driven by pent-up demand, a rebound in government capex and sustained momentum in the real estate and housing sectors, a Motilal Oswal Financial Services Ltd. (MOFSL) report said on Friday. 

Industry volumes grew by 3-5 per cent year-on-year (YoY) during October-November 2024, despite a challenging October due to unseasonal rains, a high base from the previous year, and the overlap of festive seasons.

According to the report, November saw a significant 20-22 per cent YoY growth.

For H2 FY25, volume growth is projected at 8-9 per cent YoY, with expectations of a strong start to FY26 during the March-June period, typically the peak consumption window, according to the MOFSL report.

The top picks in the sector include Ambuja Cements (ACEM), among others.

Cement prices have largely remained flat month-on-month (MoM) in November. Historically, second-half realisations have trended lower by 1-6 per cent compared to the first half over FY13-24.

On the cost side, imported petcoke prices rose by 3-5 per cent (on-month) in November, while imported coal prices (South African) remained stable.

The report further stated that consumption costs for imported petcoke stood at Rs 1.20/Kcal, compared to Rs 1.65/Kcal for South African coal.

Lower fuel prices are expected to improve cement spreads by Rs 25-30 per tonne in H2 FY25 over H1 FY25.

EBITDA per tonne is projected to grow 23 per cent sequentially during this period, supported by marginal realization gains, positive operating leverage, and cost optimization measures, including increased use of green energy, alternative fuels, and improved logistics efficiency.

“The Indian cement sector will remain structurally resilient, with strong demand fundamentals and improving cost structures,” the report maintained.