Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Cement: Housing push - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 27, 2002

    Cement: Housing push

    Cement, one of the key infrastructure industries, recorded a good growth in FY02. Domestic demand grew by 9.5%, according to Cement Manufacturers Association (CMA). This translates to a figure of 102 m tonnes. This growth is mainly attributed to the Government spending to develop infrastructure like roads and housing.

    Though it was the spending on NHDP (National Highway Development Program) that spurred the growth in FY02, it is housing that traditionally has been the growth driver. We look at the prospects of the housing sector driving future growth.

    Historically, housing has accounted for nearly 60% of domestic demand and there has always been a conscious effort by the government to promote the housing industry. However, in the past two years there, attention given has improved. The budgets in the recent past proposed to make available a 20 percent rebate under section 88 of the Income-tax Act for repayment of housing loans up to Rs 20,000 per year as against Rs 10,000 earlier. The government has also enhanced the deduction of interest paid on borrowings to Rs 150, 000.

    In the budget for the fiscal 2002-03, various schemes like the Indira Awas Yojana were announced. The government has announced a package of Rs 15 bn for the scheme. According to which, about 1 m rural houses are to be constructed. Also, the co-operative sector has been instructed to help construct 150,00 rural houses and the National Housing Board will help finance another 1 m houses. Other measures taken to improve the demand include a 20% increase in the housing related credit flow to the agricultural sector.

    While the steps taken are a big push for the cement industry, the real good news comes from the fact that the demand for the Rs 94 bn (US$ 2 bn) housing industry is far greater than the supply. In FY02, the demand stood at nearly 4.5 m units, while the supply was only 3.5 m units.

      HDFC ICICI SBI LIC Housing Corporation Bank
    Fixed rate* 10.0-11.0% 11.0-12.0% 12.0-12.5% 10.0-12.0% 10.5-11.5%
    Floating rate* 11.0% 10.5-11.0% 11.5% 11.0% 11.0%

    *For varying time periods and amounts

    Another encouraging trend has been the reduction in the interest rates on housing loans. These interest rates have fallen by nearly 5 percent in the last 5 - 6 years. These rate cuts have prompted a greater number of people to go in for housing loans. Decreasing property prices have also contributed to the increase in demand. The sector has grown 30% on an average in the past years and is expected to maintain this growth rate in the coming years.

    Last year highway projects have been largely responsible growth in the industry, but the housing sector seems all set prop up growth rates going forward. The question is will this reflect in the topline as overcapacity in the industry has lead to low cement prices. Stiff competition in the future is likely to take a toll on margins.



    Equitymaster requests your view! Post a comment on "Cement: Housing push". Click here!


    More Views on News

    UltraTech: Post-Acquisition Cement Capacity Augmented to 93 MTPA (Quarterly Results Update - Detailed)

    Aug 11, 2017

    UltraTech Cement completed the acquisition of cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL) during the quarter ended June 2017.

    Ambuja Cement: Fall in Other Income Drag Bottomline Lower (Quarterly Results Update - Detailed)

    Aug 11, 2017

    While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.

    ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments (Quarterly Results Update - Detailed)

    Jul 20, 2017

    Expanded capacity helped ACC strengthen its market presence in eastern region during the quarter ended June 2017.

    UltraTech: One of the Weakest Quarters in Years (Quarterly Results Update - Detailed)

    May 18, 2017

    Cement demand was weak because of subdued housing demand, volatile cement prices, and rising fuel costs.

    Ambuja Cem: Net Profits zoom up 361% YoY During Jan-March Quarter (Quarterly Results Update - Detailed)

    May 8, 2017

    Stock price jumps up on Ambuja-ACC merger talks...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms