Will India's Cement Demand Surge by 6-7% in FY26 Due to Infrastructure Initiatives?
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Synopsis
India's cement sector is poised for significant growth in FY2026 as demand from housing and infrastructure projects drives an expected 6-7% increase in consumption. With new capacity expansions planned and rising prices, the industry outlook remains promising.
Key Takeaways
- Cement volumes in India are expected to rise by 6-7% YoY in FY2026.
- Projected cement consumption will be around 480-485 million MT.
- New capacity additions of 40-42 million MTPA planned for FY2026.
- Average cement prices expected to increase by 3-5%.
- Operating margins projected to rise by 80-150 basis points.
New Delhi, June 30 (NationPress) Cement consumption in India is projected to increase by 6-7% year-on-year (YoY) for FY2026, reaching an estimated 480-485 million metric tonnes (MT), according to a recent report released on Monday.
This anticipated growth is primarily fueled by sustained demand from the housing and infrastructure sectors, as highlighted in ICRA's latest findings.
In FY2025, the sector experienced a growth rate of 6.3%, achieving a total volume of 453 million MT.
The forecast for FY2026 remains robust, with ongoing government-led infrastructure projects and private housing developments continuing to drive a stable demand for cement.
The report further indicates that cement producers are preparing to expand their capacity by approximately 40-42 million MT per annum (MTPA) in FY2026, an increase from the 31 MTPA added in FY2025.
The eastern region is anticipated to spearhead this capacity growth, contributing around 14-15 million MTPA.
Despite this capacity enhancement, the average capacity utilization is expected to remain steady at about 70% due to the expanded production base.
Cement prices, which witnessed a decline in FY2025 due to sluggish demand during the first half, are forecasted to rebound in FY2026.
The average price across India was Rs 340 per bag in FY2025, down from Rs 365 in FY2024. Nevertheless, a price increase of 3-5% is projected for FY2026.
Industry stakeholders had already implemented a price hike of 4-5% in the latter half of FY2025 compared to the initial half.
Input costs, including petcoke and freight, are predicted to remain stable, although they are sensitive to fluctuations in global crude prices and geopolitical events.
Thanks to the anticipated improvement in prices alongside steady input costs, operating margins for FY2026 are projected to rise by 80-150 basis points to reach 16.3-17%.
Operating profits per tonne (OPBITDA/MT) are expected to grow by 10-14%, reaching Rs 880-920 per MT.
The report emphasizes that leading cement firms are likely to outpace the broader industry in terms of both revenue and volume growth.
For ICRA's sample of major players, revenue is expected to grow by 12-14%, supported by 8-9% growth in volumes and a 3-5% increase in average prices.
Financially, the report presents a positive outlook. Despite significant capital expenditure requirements, major cement companies are projected to reduce their overall debt by 7-8% in FY2026 through repayments and pre-payments.
Consequently, key debt protection metrics such as leverage (Total Debt/Operating Profit) and debt coverage (DSCR) are anticipated to improve to 1.2-1.3x and 3.4-3.5x, respectively.
Point of View
I believe that the forecasted growth in India's cement demand reflects not just a recovery in the sector, but also a broader economic momentum driven by infrastructure development. Such growth is essential for sustaining the nation's economic health and will undoubtedly create a ripple effect across various industries.
NationPress
30/06/2025
Frequently Asked Questions
What is the expected growth rate for cement demand in India for FY2026?
Cement demand in India is projected to grow by 6-7% year-on-year for FY2026.
What factors are driving this growth?
The growth is primarily driven by ongoing demand from the housing and infrastructure sectors.
How much new capacity are cement manufacturers planning to add?
Cement manufacturers plan to add approximately 40-42 million MT per annum (MTPA) in FY2026.
What is the current average price of cement in India?
The average pan-India price for cement was Rs 340 per bag in FY2025, with a projected increase of 3-5% for FY2026.
How will operating margins be affected in FY2026?
Operating margins are projected to improve by 80-150 basis points to reach 16.3-17% in FY2026.
