Play real estate rebound with cement, ceramic, tiles stocks


With the revival of the real estate industry, cement, tiles, sanitaryware and paints companies all stand to benefit. The sharp recovery seen in cement demand in the past few months will continue to persist in the near term with the government’s resolve to spend on public infrastructure such as roads, bridges and ports to boost the economy hit by the Covid-19 pandemic.

Higher infrastructure spending by the government, an upturn in housing construction and an overall improvement in the macroeconomic conditions are expected to drive volumes in cement, paint and ceramic tiles. A number of players are expanding their businesses around the country, owing to increased customer base, enhanced effective operations, developed product portfolios and expanded geographical reach.

Given the potential for government spends and expectation of revival of the real estate sector, large cement companies such as UltraTech Cement, Ambuja Cement, ACC and the JSW Group-owned Shiva Cement have lined up investments of Rs 7,800 crore for the next three years.

The ceramic industry is also witnessing exponential growth, as the industry changes gears amid a continuous shift from unorganised to organised hands and a shift in product focus with rising share of glazed vitrified tiles (GVT) and polished glazed vitrified tiles (PGVT). Besides, growing global penetration of large slabs, implementation of the best-in-class technology and innovation to manufacture products suitable for global markets are other key factors that are continuously giving the much needed support to the industry.

Transformational changes such as GST, RERA, e-way bill and the like have paved the way for moving the industry from unorganised to organised hands. Moreover, India now contributes more than 10% of the global ceramic output. Exports to key markets such as the US and the UK, which contribute to about 9% of overall ceramic tile exports, are expected to grow at a robust 50% following the anti-dumping duty (ADD) imposed by the US on Chinese tiles earlier this year. Over the next few years, the Indian ceramic industry is bound to see handsome flow of domestic and foreign investments, as the growth story continues to lead us to the first position in the world. The ceramic tiles market is projected to grow from $207.7 billion in 2020 to $285.1 billion by 2025, growing at a CAGR of 6.5% during this period.

The paint industry has proved very resilient in the recent past amid the Covid pandemic, and continued to witness strong demand after the second wave. An increase in demand is expected for both the decorative and industrial paint segments going forward, thanks to the massive infrastructure initiatives of the Government of India. The decorative paint segment constitutes around 74% of the total paint sales, resulting in the paint sector growing at a robust rate even at the time of an industrial slowdown.

The size of Indian paint industry is pegged at approximately Rs 54,500 crore and is projected to grow to Rs 97,100 crore by 2024. The overall thrust on housing for all/affordable housing measures by the government has aided fresh demand for paint and repaint in the foreseeable future. Going forward, the decorative paint 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% by 2024.

And now with real estate sales picking up, the prospects for cement, paints and tiles & sanitaryware sectors look bright, and stock investors can look to cash in on it by taking exposure to the leading names from these segments.


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