The Centre's focus on building infrastructure is expected to drive demand for the mining and construction equipment sector in the calendar year 2021, ICRA Ratings said on Tuesday.
The ratings agency expects the sector to grow at around 15-17 per cent in 2021, against its earlier estimate of 15-20 per cent.
"Patchy monsoons, together with price increase, against a backdrop of stagnant equipment rental yields, have impacted customer sentiments and in turn the volume," said Mayank Agrawal, Sector Head and Assistant Vice-President, Corporate Sector Ratings.
"While the volumes are expected to increase sequentially in Q3 and Q4 CY2021 compared to Q2 CY2021, they will remain weaker compared to Q3 and Q4 CY2020," he added.
Besides, ICRA's outlook on the sector remains 'stable' due to the Centre's infrastructure push and favourable growth prospects, he said.
"With expected easing of supply-side constraints and continued infrastructure push, ICRA expects volume growth of 7-10 per cent during CY2022. Nevertheless, increasing cost of ownership, muted rentals or any slowdown in infrastructure activity poses downside risks to our estimates," Agarwal said.
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