Higher infrastructure spending by the government, a revival in housing construction and a general improvement in the macroeconomic framework should boost sales volumes for cement, paints and ceramic tiles. A number of players are expanding their businesses across the country due to a larger customer base, improved effective operations, developed product portfolios and expanded geographic reach.
Given the potential for government spending and the expectation of a revival in the real estate sector, large cement companies such as UltraTech Cement, Ambuja Cement, ACC and JSW Group’s Shiva Cement have planned investments of Rs.7,800 billion over the next three years.
The ceramics industry is also experiencing exponential growth as the industry shifts gears amid a continual shift from disorganized to organized hands and a shift in product focus with an increasing proportion of glazed stoneware tiles (GVT) and polished glazed stoneware tiles (PGVT). In addition, the increasing global penetration of large slabs, the implementation of best-in-class technology, and innovations to manufacture products that are suitable for the global market are other key factors that continue to provide the industry with much-needed support.
Transformation changes like GST, RERA, e-waybill and the like have paved the way for moving the industry from unorganized to organized hands. In addition, India now accounts for more than 10% of global ceramic production. Exports to key markets like the US and UK, which account for about 9% of total ceramic tile exports, are expected to grow a solid 50% this year after the anti-dumping duty (ADD) the US previously imposed on Chinese tiles. In the next few years, the Indian ceramics industry is sure to see a significant influx of domestic and foreign investment as the growth story continues to take us to the first position in the world. The ceramic tile market is projected to grow from $ 207.7 billion in 2020 to $ 285.1 billion by 2025, growing at a CAGR of 6.5% over that period.
The coatings industry has proven to be very resilient in the recent past amid the Covid pandemic and continued to see strong demand after the second wave. In the future, thanks to the massive infrastructure initiatives of the Indian government, increasing demand is expected for both decorative and industrial paints. The architectural coatings segment accounts for around 74% of total paint sales, which means that the paint sector is growing robustly even in times of a weakening industry.
The size of the Indian paint industry is estimated at around 54,500 billion rupees and is expected to grow to 97,100 billion rupees by 2024. The overall pressure on housing for all / affordable government housing has encouraged new demand for paint and repainting for the foreseeable future. Going forward, the architectural coatings market is expected to grow at a CAGR of 13%, while the industrial paint market is expected to grow at a CAGR of 9.9% through 2024.
And now that property sales are picking up, the outlook for the cement, paint, and tile & plumbing sectors is bright, and stock investors can take advantage of it by getting involved in the leading names in those segments.