Cement: Infrastructure Boost To Support Demand

Budget proposals

Proposes to award another 8,500 kms and complete an additional 11,000 kms of national highway corridors. More than 13,000 km length of roads, at a cost of Rs 3.3 lakh crores, has already been awarded under the Rs 5.35 lakh crores Bharatmala Pariyojana project of which 3,800 kms have been constructed.

Proposes 3,500 km of National Highway works in the state of Tamil Nadu at an investment of Rs 1.03 lakh crores. These include Madurai-Kollam corridor, Chittoor-Thatchur corridor. Construction will start next year.

Proposes 1,100 km of National Highway works in the State of Kerala at an investment of Rs 65,000 crores including 600 km section of Mumbai-Kanyakumari corridor in Kerala.

Proposes 675 km of highway works in the state of West Bengal at a cost of Rs 25,000 crores including upgradation of existing road-Kolkata –Siliguri.

Proposes works of more than Rs 34,000 crores covering more than 1300 kms of National Highways to undertaken in the State in the coming three years in addition of National Highway works of around Rs 19,000 crores are currently in progress in the State of Assam.

Proposes to introduce MetroLite and MetroNeo in Tier 2 cities and peripheral areas of Tier 1 cities. These are low-cost Metro projects. Kochi Metro, Chennai Metro Phase 2, Bengaluru Metro Phase 2A and B, Nashik and Nagpur Metros get additional allocations.

Proposes to set up 100 new Sainik schools in partnership with NGOs/private schools/states. There are other ‘umbrella’ structures to be created for higher education.

Proposes to set up 750 Eklavya schools in tribal areas, with the increase of the unit cost of each such school from Rs 20 crores to Rs 38 crores, and for hilly and difficult areas, to Rs 48 crores. A Central University will come up in Ladakh. More than 15,000 schools will be strengthened under NEP 2020.

Propose to enhance the allocation to the Rural Infrastructure Development Fund to Rs 40,000 crores.

Propose to extend the eligibility for loan taken to purchase an affordable house deduction of interest, amounting to Rs 1.5 lakh by one more year, to 31st March 2022. Further, to keep up the supply of affordable houses, propose that affordable housing projects can avail a tax holiday for one more year – till 31st March 2022.

Stocks to watch

UltraTech Cement, ACC, Ambuja Cements, Shree Cement, Birla Corp, JK Cement, Heidelberg Cement, The Ramco Cement

Outlook:

Higher allocations towards capital (infrastructure) spending to the Roads, railways and other infra sectors in the Budget 2021-22 to be positive for cement industry and help COVID-19 pandemic clutched India’s economy to attains economic normalisation. There are no specific budget announcements pertaining to the cement industry. Cement sector is an indirect beneficiary of higher government spending towards infrastructure, highways, railways, housing and rural development as it will boost demand for the cement commodity.

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