India’s Construction Material Sector: A Cornerstone of Economic Growth
India’s construction material sector is a cornerstone of the nation’s economic growth, driving infrastructure development and generating significant employment. This sector plays a pivotal role in fueling the nation’s infrastructure boom, supported by rising urbanization, real estate growth, and increasing disposable income.
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Budget Boost and Government Initiatives
The Interim Union Budget 2024-25 has significantly boosted the sector with an 11.1% increase in capital investment outlay for infrastructure, amounting to ₹11.11 lakh crore (USD 133.86 billion), which constitutes 3.4% of the GDP. Initiatives like the Smart Cities Mission and Housing for All have greatly benefited from these investments. The Smart City project aims to build 100 smart cities, while the Pradhan Mantri Awas Yojana (Grameen) is on track to meet its target of 3 crore houses, with an additional 2 crore planned for the next five years.
Urbanization and Economic Impact
India is urbanizing rapidly, with projections indicating that by 2036, towns and cities will be home to 600 million people or 40% of the population, up from 31% in 2011. Urban areas are expected to contribute almost 70% to the GDP. The real estate sector, second only to agriculture in employment generation, is poised to reach a market size of USD 1 trillion by 2030, up from USD 200 billion in 2021, and is anticipated to contribute 13% to the country’s GDP by 2025.
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Key Segments of the Construction Material Market
The Indian construction material market is diverse, with various segments catering to different construction needs. Here’s a breakdown of the major segments:
1. Cement:
Cement is the largest segment, crucial for major construction projects. India is the second-largest producer of cement globally. The market size reached 3.96 billion tonnes in 2023 and is expected to grow to 5.99 billion tonnes by 2032, with a CAGR of 4.7% from 2024-32.
2. Aggregates:
Comprising sand, gravel, and crushed stones, aggregates are essential for creating concrete. This segment is projected to register a CAGR of over 6% until 2029 from 2023.
3. Steel:
Vital for structural support, steel plays a crucial role in construction, especially in high-rise buildings and bridges.
4. Ceramics, Sanitary Ware, and Marble:
The ceramics tiles market is estimated to reach USD 17.36 billion by 2029, growing at a CAGR of 13.54%. The sanitary ware market is projected to grow to USD 74.80 billion by 2029, with a CAGR of 6.89%. The marble market is expected to reach USD 26.07 billion by 2029.
5. Timber
Despite facing competition from alternative materials, timber remains popular for furniture, doors, and framing in residential construction.
6. Emerging Segments:
There is a rising demand for new-age materials like prefabricated elements, ready-mixed concrete, and sustainable materials like fly ash bricks and recycled steel.
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Financial Performance
In the fiscal year 2024, the top two listed companies by market capitalization in each industry segment of construction materials generated net sales of ₹124,888.28 crore, up by 2.63% compared to ₹121,682.76 crore in FY23. The operating profit stood at ₹24,421.79 crore, showing a YoY growth of 19.95% from ₹20,360.60 crore. The net profit came at ₹13,394.87 crore in FY24, up by 34.06% YoY from ₹9,951.92 crore in FY23. Cement industry stocks showed robust net profit growth, along with ceramics, sanitary ware, and marble stocks that saw an increase in PAT.
Future Outlook
The Indian construction material sector is poised for robust growth, driven by government initiatives, rising disposable income, and the burgeoning real estate sector. The adoption of sustainable practices and technological advancements will further propel this growth. As India continues to urbanize and develop its infrastructure, the construction material sector stands tall as a key driver of the nation’s economic progress.
