India's demand for stainless steel, which was four million tonne in 2022, is projected to log a healthy compound annual growth rate (CAGR) of 9 per cent in the three fiscals through 2025, according to a CRISIL Ratings report.
It is estimated that the demand for the metal will be double the 4.5 per cent pace of the past five fiscals.
The report attributed the rise in demand to the increasing adoption of stainless steel in railways -- a focus area for government infrastructure spending -- and rising application in the automobile and construction sectors.
"Adoption of stainless steel is increasing because of its higher durability and lower maintenance. Demand from railways is expected to more than triple by fiscal 2025 and constitute 20 per cent of incremental demand for the metal over fiscal 2023-2025. To be sure, the recent Union Budget has doubled the amount earmarked for manufacturing railway coaches to Rs 47,500 crore for fiscal 2024," said Ankit Hakhu, Director, CRISIL Ratings.
The demand growth, in turn, it said will spur capacity additions in the industry.
"Strong demand prospects, coupled with the absence of any major supply addition in the last three fiscals, have set the stage for capital expenditure (capex)," the report said.
Credit profiles of domestic stainless-steel manufacturers are expected to remain healthy in fiscal 2024 on the back of lower debt, stable profit and healthier balance sheets, it said. (ANI)