Ratings agency ICRA says that an expected revival in the infra space may help cement demand to grow to around 4 to 5 per cent in the next fiscal.
The agency said that FY2016-17 would be a “flat year” for the sector, as demonetisation has had a negative impact on real estate and construction activities, and the situation is likely to normalise from the first quarter of FY2017-18 onwards.
ICRA is expecting an uptick in demand from road and irrigation projects and the housing segment next fiscal, which would support cement prices, going forward.
The agency also added that rising costs of transportation is likely to put pressure on profitability for the next few quarters.
"ICRA expects cement demand growth to recover to around 4-5 per cent during FY2018, driven by a pick-up in the infrastructure segment," ICRA Ratings Senior Vice President & Group Head Sabyasachi Majumdar said.