How PMAY will Impact Cement industry

Pradhan Mantri Awas Yojana is an initiative by the Government of India with the aim of providing affordable housing to the urban poor with a target of building 2 crore affordable houses by 31 March 2022. Till date 122.69 lakh houses have been sanctioned, 97.02 lakh houses are grounded, 58.01 lakh houses are completed, and Rs.8.31 lakh Crore invested.

In 4QFY22, houses approved under the PMAY Urban scheme increased to about 115 lakh as of Mar-22 vs about 114 lakh in Dec-21. As of Mar-22, the highest number of houses are approved in Andhra Pradesh (18%), Uttar Pradesh (15%), and Maharashtra (12.5%). In FY22, houses approved increased by 2.92 lakh houses vs 78.7 lakh, 25 lakh, 39 lakh in FY21, FY20, and FY19 respectively.

In 4QFY22, houses under construction increased by 37 lakh 4QFY22 (to 95.2 lakh) vs. 3.5 lakh QoQ increase seen in 3QFY22. Out of the total house under construction, 35% of houses are in the Southern region, 24% in the Central region, 18% Western region, 17% Eastern region, and the balance 6% in the Northern region.

In the last 3 months, Andhra Pradesh and Uttar Pradesh witnessed the strongest pickup in construction and contributed to about 17% each of the incremental houses; Gujarat and Maharashtra were the other top contributors. As of Mar-22, construction of houses has started at approx. 82% of the approved houses vs 80% in Dec-21. In FY22, houses under construction increased by 15 lakh vs 16 lakh, 20 lakh, and 26 lakh in the previous 3 years.

In FY22, the States seeing the fastest pick up in terms of the start of new construction are Andhra Pradesh (4.8 lakh, 32% of total) - growing at the fastest pace, Uttar Pradesh (2.4 lakh, ~16%), Maharashtra (1.6 lakh, ~11%), Gujarat (1.4 lakh, ~9%) and Karnataka (1.2 lakh, ~8%).

During 4QFY22, the house construction target (by MoRD) dropped and now stood at ~260 lakh versus the overall target of 300 lakh houses in the PMAY-Rural segment. For overall FY22, the MoRD target for house construction was revised upwards by 43 lakh vs 58 lakh and 60 lakh target increase seen in the previous 2 years.

Houses sanctioned picked up to reach 225 lakh houses by Mar-22. 13.3 lakh new houses were sanctioned in 4Q increasing from 11.4 lakh, 73.8 lakh, 46.9 lakh, and 69.3 lakh houses sanctioned in the past 4 quarters.

As of 4QFY22, the highest number of houses were sanctioned in Bihar (16%), West Bengal (13%), Madhya Pradesh (13%), Uttar Pradesh (12%), Odisha (8%), and Rajasthan (8%). For overall FY22, nearly 37 lakh were sanctioned vs 48 lakh, 46 lakh in FY21,FY20. For FY22, the highest houses are sanctioned in the states of Bihar, Madhya Pradesh, Uttar Pradesh, Rajasthan, and Jharkhand.

In the rural scheme, the pace of house completion moderated for 2 consecutive quarters and was down 28% YoY to 83.5 lakh houses vs 10-12 lakh in the last 4 quarters. Overall house completed moved to 177 lakh in 4QFY22, touching ~59% of the overall targeted 300 lakh houses.

As of Mar-22, the highest number of houses were completed in the states of West Bengal (18%), Uttar Pradesh (14%), Madhya Pradesh, and Bihar (13.5% each).

In FY22, of the total 41 lakh completed houses, the highest contribution was from the state of Uttar Pradesh (26% of the total) at about 10.7 lakh; West Bengal (9.3 lakh houses, 23%), Madhya Pradesh (5.6 lakh, 14%) and Bihar (5.4 lakh, 13%).

In FY23, the government's thrust on Housing for All is expected to continue. These schemes are expected to see a strong pick-up in overall construction activity from here on (with nearing completion of deadlines), benefitting the overall demand growth for the Cement companies.