Improving demand outlook for southern India

Cement demand in southern India is expected to witness stronger rates of growth in the current fiscal led by infrastructure projects in Andhra Pradesh, a new report has forecast.

Southern Indian consumption is expected to rise by 5-7 per cent in FY15 compared to one per cent YoY growth in FY14, a report by Karvy Broking said.

The improved demand scenario will initially will be from infrastructure projects as political stability has set in the Andhra Pradesh (AP) region, Rajesh Kumar Ravi, Karvy Broking analyst, said. Both pending and new infrastructure projects in AP should boost double digit demand growth in the state. Following on, AP, Vizag, Vijayawada and Tirupati would likely to emerge as key cities, Ravi said. Vizag is expected to emerge as the main hub while Vijayawada and Tirupati would become commercial and IT hubs respectively. These should boost cement demand due to a pick up in both housing and infrastructure activity in these regions.

Utilisation rates are also expected to pick up in the current fiscal and will be boosted by limited capacity expansion in the south, the report added.

Among southern states, Andhra Pradesh market demand is 21Mta and it is expected to grow at 10-12 per cent this fiscal, compared to six per cent YoY in the previous financial year.

The demand in Tamil Nadu is 20Mta and is expected to grow at 4-5 per cent in FY15, compared to a four per cent decline in the previous year.