Housing And Infrastructure Drive Cement Volume Gains
India’s cement industry is poised for sustained expansion over the next two fiscal years, underpinned by steady demand from housing and infrastructure sectors, according to an assessment by rating agency ICRA. Cement volumes are projected to rise 6–7 per cent in FY27, following estimated growth of 6.5–7.5 per cent in FY26, demonstrating resilience despite a relatively high base in the latter half of FY25.
The first eight months of FY26 already saw cement consumption rise 8.5 per cent, reflecting ongoing construction activity across both urban and semi-urban regions. Analysts note that demand is expected to further strengthen in the post-monsoon period, with accelerated project execution in housing and government-led infrastructure programmes, including highways, metro projects, and urban development initiatives. Potential adjustments in the goods and services tax on cement may also provide incremental support to the sector.Amid this demand backdrop, cement producers are actively pursuing both organic capacity expansion and inorganic acquisitions to consolidate market positions. ICRA estimates that 85–90 million tonnes per annum of new capacity will come online across FY26 and FY27, with roughly equal additions each year. Such expansions are aimed at capturing regional growth while balancing national supply dynamics, especially as certain southern states continue to face moderate utilisation levels due to pre-existing capacity surpluses.
Profitability trends are also favourable. Operating profit per tonne, before interest, tax, depreciation, and amortisation, is expected to rise to ₹900–950 in FY26, compared with ₹810 in FY25. This improvement is attributed to robust pricing power and higher volume realisation across the network. However, ICRA flags that FY27 could see slight moderation in margins, driven by increasing input costs, including pet coke and freight, which remain sensitive to global crude prices and geopolitical fluctuations.Regionally, North and Central India are expected to achieve capacity utilisation above the national average, benefiting from a balanced demand-supply scenario. In contrast, the southern region may maintain moderate utilisation despite recent consolidation and mergers among major players that have strengthened pan-India presence.
Overall, the cement sector is expected to sustain stable capacity utilisation at around 70–71 per cent in FY27. While growth remains steady rather than explosive, this trajectory indicates a healthy recovery and a strategic alignment of production, distribution, and pricing policies, providing an optimistic outlook for investors and urban developers seeking predictable supply chains for construction materials.
