Credit rating agency ICRA has revised its 2024-25 (FY25) full-year steel demand growth target to 9-10 per cent, 200 basis points higher compared to the earlier estimate of 7-8 per cent.
The growth forecast factors in the latest trends in the sector. Domestic steel consumption between February to April 2024 registered a growth of 11.3 per cent. In its note on the steel sector, ICRA mentioned that while government capex spending was healthy until February 2024, other steel consuming sectors like housing/real estate contributed to the resilient demand thereafter.
In FY2024, the industry registered a consumption growth of 13.6 per cent, which is marginally lower than the peak of 13.9 per cent registered in FY2006 during the golden period of India’s private sector capex.
With demand remaining healthy despite the ongoing elections, the rating agency revised its baseline FY2025 average steel prices forecast upwards by 2-3 per cent over previous estimates made in February 2024. “This is expected to lead to an earnings uplift of $12-18/metric tonne (MT) in the current fiscal,” he said.
The industry’s leverage (total debt to operating profits) was expected to remain at a comfortable level of 2.0-2.5 times in FY2025, on the back of better realisations and higher deliveries. It would make the Indian steel industry resilient to withstand a worsening global demand environment.
