Cement

What are Cement Stocks?

Cement company stocks are shares of companies involved in the manufacturing and distribution cement and concrete. At the same time, some companies also produce or deal in related materials required for building any structure. India is only second to China when it comes to cement production, and some of the top cement companies in India are also known to cater to the needs of other markets. 

Cement company stocks have always been a favourite of analysts and investors, mainly thanks to their stability and steady rise over the years. We can see innumerable examples of investors holding cement stocks making a fortune. These stocks are the best bet even today, led by fast-paced development in the country. 

With rapid growth and expansion in real estate, increased global demand, and rapid development of infrastructure projects like commercial developments, state and national highways, and industrial projects, the cement industry is poised for growth.

Future of Cement Sector Stocks?

Thanks to its rising population and large-scale infrastructure development, India has a growing need for cement and related materials to build its foundation for the future. It is no wonder that India is the second-largest cement producer globally and accounts for 7% of the global cement capacity. India's overall cement production capacity was nearly 262 million tonnes (MT) in FY21, a rise of 7.8% from the previous year. This is a remarkable rise given the stagnation faced by the construction and manufacturing industry during the COVID-19 pandemic and subsequent lockdowns.

And according to IBEF reports, this notable growth is set to continue. By 2025, the cement industry is expected to reach 550-600 MT per annum, led by the massive demand for housing, commercial and industrial construction. In addition, schemes introduced by the Indian government for improving housing like MGNREGA, PM Garib Kalyan Rozgar Abhiyan, and state-level schemes such as Matir Srisht (West Bengal) and public work schemes (Jharkhand) have aided the demand for housing. Furthermore, in October 2021, Prime Minister, Mr Narendra Modi, launched the 'PM Gati Shakti - National Master Plan (NMP)' for multimodal connectivity.

These schemes will bring synergy to create a world-class, seamless multimodal transport network in India that is also positive for the cement industry. These numbers can safely tell that the cement sector will benefit greatly thanks to India's rapidly increasing infrastructure requirements. The demand will be high in the next few years, as the country is expected to establish 100+ smart city projects and related infrastructure projects. 

Is it worth investing in Cement stocks?

The cement industry has been one of the most reliable in terms of growth, and so cement stocks are always a top consideration among investors. Despite slight fluctuations in cement stocks due to recent events, the industry is poised for long-term growth and will make a great addition to any portfolio. 

When investing in this sector, one should also look at the historical data of the cement sector share price to understand if it is a good time to enter. Even though this sector is a relatively safe investment, cement stocks are also prone to risks. Before investing in a cement stock, it is ideal to consult a broker and do thorough research. The industry has heavy competition and the presence of many established players, which make it difficult to recommend one particular company. Thus, when choosing a cement sector stock, investors should look into the company's financial track record, existing debt, and future opportunities to make an informed decision. 

We recommend investors diversify their portfolios and not just focus on one industry. For example, holding a position for cement stock is recommended for long-term holding, while one can take trade calls depending on their research and risk appetite.