ICRA predicts cement volumes to grow by 6-7% in FY2026 due to increased demand from housing and infrastructure sectors. The sector’s capacity addition is expected to rise to 43-45 million MTPA from 32-35 million MTPA in FY2025. In H1 FY2025, volumes increased by 1.7% YoY to 212 million MT due to construction slowdowns.
However, in H2 FY2025, volumes saw a 10.7% YoY growth to 241 million MT. Large cement companies are expanding capacities to strengthen their market share. The industry’s capacity utilization is expected to remain stable at 70% in FY2026 Cement prices have shown signs of recovery from Q3 onwards, with pick-up in demand after.
A 10% decline in average realisation during H1 FY2025. Moderation in costs of coal and pet-coke, which declined by 23% and 13% YoY, provided some respite to cement companies in the interim. The credit profile of cement producers, especially of larger and mid-size companies, is expected to remain stable, driven by a healthy growth.
Operating income, expected improvement in operating margins, and comfortable leverage metrics. However, smaller players will witness pressure on their credit profile in the backdrop of moderation in operating profitability. Consolidation in the Indian cement industry has constrained pricing flexibility of small/regional players.
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Mumbai, April 2025 – India’s cement industry is poised for steady growth in the upcoming financial year, with volumes expected to rise by 6–7% in FY2026, according to a recent report by credit rating agency ICRA. The forecast reflects optimism driven by continued infrastructure development, strong housing demand.
In FY2025, cement demand saw robust double-digit growth of approximately 11%, aided by pre-election infrastructure push, rural housing programs, and ongoing construction activity across urban and semi-urban centers. While the growth rate is expected to normalize in FY2026, ICRA maintains a positive outlook on sector.
“The demand momentum is likely to sustain in FY2026, supported by a healthy pipeline of infrastructure projects, increasing urbanization, and the government’s thrust on affordable housing under schemes like PMAY,” said Anupama Reddy, Vice President & Co-Group Head – Corporate Ratings, ICRA fundamentals.
Capacity Addition and Pricing Trends
Cement manufacturers are expected to add around 35–40 million tonnes per annum (MTPA) of new capacity over the next 12–18 months, which may intensify competition and impact regional pricing dynamics. However, steady demand growth is likely to support capacity utilization levels, which are expected to hover around 70–72% FY2026.
In terms of pricing, the report indicates moderate increases depending on region-specific supply-demand equations. Input cost pressures, especially from coal and pet coke, have eased somewhat, offering margin relief to manufacturers Operating margins, which came under pressure in FY2024 due to high raw material and logistics costs, are expected to efforts.
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