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India's cement industry is expected to witness steady growth in the coming years, with cement volumes projected to expand by 6-7 per cent in FY27, supported by sustained demand from the housing and infrastructure sectors, according to a report by rating agency ICRA.
The agency noted that the industry is likely to maintain its healthy momentum after registering a 6.5-7.5 per cent growth in FY26, despite a higher base in the second half of FY25. Cement demand remained robust in the current fiscal year, with volumes rising by 8.5 per cent during the first eight months of FY26, aided by strong construction activity across regions. ICRA expects demand to improve further in the second half of FY26 as post-monsoon construction activity gains pace. Additionally, factors such as the government's continued focus on infrastructure spending and the possibility of a reduction in Goods and Services Tax (GST) on cement are expected to support demand momentum through FY26 and FY27. Amid these favourable demand conditions, cement manufacturers are continuing to expand capacities through both organic and inorganic routes to strengthen their market positions. The industry is estimated to add 85-90 million tonnes per annum (MTPA) of capacity during FY26-FY27, including 43-45 million MTPA in FY26 and a further 42-44 million MTPA in FY27. Commenting on the outlook, Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings at ICRA, said that profitability in the sector is expected to improve significantly in FY26, driven by better pricing and higher volumes. "In FY2026, the profitability is projected to improve significantly, with OPBITDA/MT rising to Rs 900-950/MT from the lows of Rs 810/MT in FY2025, aided by better pricing and higher volumes. Entering FY2027, the industry is poised for steady growth of 6-7%, underpinned by continued demand from the housing and infrastructure sectors," noted Anupama Reddy However, ICRA expects some moderation in earnings in FY27 due to rising input costs. The agency has estimated OPBIDTA per tonne at Rs 880-930 in FY27, as input prices such as pet coke and freight are likely to edge up and remain linked to global crude oil prices and geopolitical developments. Region-wise, North and Central India are expected to report capacity utilisation levels higher than the national average, while the southern region may continue to see relatively moderate utilisation due to existing capacity overhang. "Some regions, such as North and Central India, are likely to witness higher capacity utilisation than the national average of about 70%, while the southern region may continue to witness relatively moderate utilisation due to capacity overhang," says Anupama Reddy. Recent merger and acquisition activity in the southern market has helped large players strengthen their regional and pan-India presence. Overall capacity utilisation for the cement industry is projected to remain stable at 70-71 per cent in FY27, broadly in line with FY26 levels, albeit on an expanded capacity base. (ANI)
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