Cement makers line up Rs 1.25 lakh crore capital expenditure over fiscals 2025-27: Crisil
Indian cement makers are expected to undertake capital expenditure worth Rs 125,000 crore during financial years 2025-2027, driven by healthy demand outlook and quest for attracting market share, asserted Crisil Ratings.
ANI
Aug 25, 2024 10:27 IST
New Delhi [India], August 25 (ANI): Indian cement makers are expected to undertake capital expenditure worth Rs 125,000 crore during financial years 2025-2027, driven by a healthy demand outlook and a quest to attract market share, asserted Crisil Ratings.
As per the rating agency, the projected outlay will be 1.8 times the capital expenditure during the past three financial years. The credit risk profiles of manufacturers are expected to remain stable.
A capital expenditure, or capex, is used to set up long-term physical or fixed assets.
A healthy annualised increase in cement demand in the past three years outpaced growth in capacity addition, pushing industry utilisation level to a decadal high in 2023-24 and prompting manufacturers to press the capex pedal.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, said that cement demand outlook remains healthy with a compound annual growth rate of 7 per cent over fiscals 2025-2029.
"The surge in capex over the next three fiscals will primarily cater to this growing demand as well as to the aspirations of the cement makers to improve their national presence. A total of 130 million tonne (MT) of cement grinding capacity (nearly a fourth of the existing capacity) is likely to be added by players over this period," added Gupta.
Ankit Kedia, Director, CRISIL Ratings, said the low capex intensity will keep the balance sheets of cement manufacturers strong and ensure stable credit profiles.
"Over 80 per cent of the projected capex over the three fiscals through 2027 is likely to be funded through operating cash flows, resulting in minimal requirement of additional debt," added Kedia. (ANI)
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