New Delhi: India’s cement industry is expected to register a volume growth of 6–7 per cent in FY27, supported by sustained demand from housing and infrastructure projects, according to a latest assessment by rating agency ICRA. The outlook follows an anticipated growth of 6.5–7.5 per cent in FY26, despite a high base created in the second half of FY25.
Cement demand has remained robust so far in the current financial year. Volumes expanded by around 8.5 per cent during the first eight months of FY26, driven largely by strong construction activity across regions. ICRA expects demand to strengthen sequentially in the second half of FY26 as construction activity accelerates after the monsoon season.
Additional support for demand is likely to come from continued government expenditure on infrastructure and the possibility of a reduction in GST on cement, which could improve affordability and consumption through FY26 and FY27.
India Cement Industry Growth Outlook Supported by Capacity Expansion
Against the backdrop of steady demand, large cement manufacturers are continuing to expand capacity through both organic and inorganic routes. The industry is projected to add 42–44 million tonnes per annum (MTPA) of new capacity in FY27, following capacity additions of 43–45 MTPA expected in FY26.
ICRA noted that capacity utilisation levels are likely to vary by region. North and Central India are expected to record utilisation rates higher than the national average of about 70 per cent, supported by strong infrastructure and housing activity. In contrast, the southern region may continue to face relatively lower utilisation due to surplus capacity.
Overall, industry-wide capacity utilisation is projected to remain stable at around 70–71 per cent in FY27, broadly in line with FY26 levels, even as the total installed capacity expands.
Pricing Trends and Cost Pressures Shape Earnings Outlook
ICRA expects cement prices to rise by an average of 2–4 per cent in FY27, following an estimated increase of 3–5 per cent in FY26. This comes after a sharp 7 per cent decline in prices during FY25, which was impacted by weak construction activity in the first half of that year.
Blended realisations have already improved by nearly 5 per cent year-on-year during the first eight months of FY26, with price hikes observed across most regions except the western part of the country.
On the cost side, input expenses are expected to edge up marginally in FY27, which could place some pressure on earnings. Key cost components such as pet coke and freight remain linked to global crude oil prices and are exposed to volatility arising from geopolitical developments and commodity market fluctuations.
India Cement Industry Growth to Keep Profitability Largely Stable
Commenting on the sector outlook, Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings at ICRA, said that in FY26, the Indian cement industry is expected to sustain growth of 6.5–7.5 per cent, driven by infrastructure spending and residential demand.
She noted that profitability is projected to improve in FY26, with operating profit before depreciation, interest, tax and amortisation (OPBIDTA) per tonne rising to ₹900–950, compared with ₹810 in FY25. This improvement is expected to be supported by higher volumes and better pricing.
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Looking ahead to FY27, Reddy said growth is likely to moderate slightly to 6–7 per cent, led by housing and infrastructure demand. OPBIDTA per tonne for ICRA’s sample set of cement companies is expected to soften marginally to ₹880–930 in FY27, following a strong 12–18 per cent increase in FY26, primarily due to higher input costs.
Overall, ICRA’s outlook suggests that while cost pressures may temper profitability growth, the cement sector remains well-positioned for steady expansion, supported by structural demand drivers and ongoing infrastructure development.
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