Index : 1,413 | 1Yr : -50.54% | 1Mo : +16.91%
Category : Sectoral Trackers
Min Investment : 10,663
Ceramics are mainly used in the manufacturing of tiles and sanitaryware and India is the world's third largest manufacturer and consumer of ceramic tiles and yet roughly 50% of Indian households do not have toilets! The companies that make these products have more than sufficient domestic demand and they have also been developing an export market primarily in Africa and the gulf countries in the recent years.
With a large unorganized sector (Upto 50% in tiles segment) operating in this sphere, it gives large companies the opportunity to gradually take over the market share. It seems imminent as the installed capacities of these companies have increased continuously via joint ventures with SME players in the last few years. These joint ventures are a win-win situation as the large companies circumvent high capital investments and simultaneously it also provides revenues for the SME players.
The ceramic industry is heavily dependant on the performance of the real estate sector, rate of urbanization and demand for better flooring and sanitary ware in tier 2 & tier 3 cities. It is also very sensitive to fuel and power costs.
With a per capita consumption of ceramics at roughly 1/6th of other developing countries like China and Brazil, it requires no genius to estimate the sheer growth potential. With the government's urbanization programmes and emphasis on toilets, this sector is likely to benefit exponentially in the future. Invest in well managed companies that can potentially capture a significant portion of the estimated future growth.