Booming Building Materials Space

Industrial Update – Newsletter – September 2023

IMAP’s Industrials group brings you this monthly update with a focus on latest news, transactions and interesting snippets from the Industrials domain in India

Building Materials Space: A US$ 244 billion market

Building materials industry in India is expected to grow from estimated $244 bn in FY22 to $365 bn in FY27, at about 1.2 to 1.3x of estimated GDP growth during this period. 

Basic building materials  comprise steel, cement, aggregates, bricks, etc. which makeup ~70-75% of the total market size and is expected to grow at ~7% over FY22-FY27.  Other building materials comprises paints, tiles construction chemicals, glass, non-wooden doors and windows, composite panels, plumbing fittings, etc. Though smaller in overall size, this segment is expected to grow much faster at ~13%

New materials and categories in building materials have emerged due to – need to reduce labor component in construction and maintenance costs, reduction of construction time, enhancement in performance & durability of construction, overall aesthetics and a greater emphasis on environment friendly materials.

Construction material industry, which is largely B2B has seen strong digital adoption; In India, B2B online penetration is currently ~1% and is expected to increase to 6% in next 5 years – some of the players in this space include Infra.Market, OfBusiness, Brick&Bolt etc. Also, within this space, the following product categories are witnessing strong growth:

Some recent transactions

Sep’23Ather EnergyThe EV scooter manufacturer raised ₹ 900 Cr. from Hero Motocorp and GIC Singapore.
Sep’23Kale LogisticsCreaegis invested ₹248 Cr. in the logistics SaaS company.
Sep’23Ola ElectricTemasek invested ₹1163 Cr. for a 2.55% stake in the EV manufacturer.
Sep’23Raptee MotorsThe EV manufacturer raised ₹25 Cr. in a fundraise led by BlueHill Capital.
Sep’23Everest FleetThe B2B fleet management company raised ₹50 Cr. from Paragon Partners.
Sep’23Resowi EnergyInox Green Energy acquired a 51% stake for an undisclosed amount.

Recent News

  • OECD estimate of world GDP growth was upgraded to 3% (from 2.7%) for 2023 despite the weaker-than-expected recovery in China
  • China’s $18 trillion economy has been struggling- manufacturing activity contracted for a fifth straight month in August, growth in the country’s services sector has weakened and consumers are spending less; also stress in the real estate segment as its largest real estate developer, Country Garden, missed payments on its bonds
  • Brent crude rose to US$ 95 per barrel (highest in almost a year) as Saudi Arabia and Russia extended their voluntary oil production cuts
  • Manufacturing PMI for India in August’23 was at 58.6 (compared to 57.7 in July’23); PMI value above 50 indicates growth
  • Arm Holdings, the chip design company controlled by SoftBank came out with much anticipated IPO valuing the company at ~$60 billion

IMAP Industrials Index & Valuation of sub-segments

Commodity Prices Index

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