Will India's Cement Sector Experience 7% Annual Demand Growth Over the Next Three Years?
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Synopsis
India's cement industry is set to witness a remarkable growth trajectory, with a projected annual demand increase of 7% over the next three years. A recent report by HSBC Global Research sheds light on the market dynamics, revealing insights into pricing power and capacity expansions that could reshape the industry landscape.
Key Takeaways
- Projected annual demand growth of 7% for the cement sector.
- Top four players control 57% of the market.
- Expected rise in cement prices starting in November.
- EBITDA per ton forecasted to grow at 13% CAGR.
- Potential risks include reduced government spending and housing slowdowns.
New Delhi, Sep 16 (NationPress) India's cement sector is projected to witness an annual demand growth of approximately 7 percent over the next three years, according to a report released on Tuesday. HSBC Global Research has expressed an optimistic perspective on the nation’s cement market, indicating that FY26 will mark the peak for capacity expansions in the current economic cycle.
The report highlights that the top four companies currently control 57 percent of the market, and HSBC anticipates that this consolidation will bolster pricing power.
Cement prices are expected to rise starting in November, fueled by the high leverage of smaller rivals and the inability of larger firms to engage in price wars due to a similar leveraged situation, as noted by the brokerage.
Furthermore, HSBC forecasts that EBITDA per ton will increase at a 13 percent CAGR from FY25 to FY28, supported by a rise in average selling prices per ton, projected to increase by 3.6 percent in FY26, 2.5 percent in FY27, and 2.1 percent in FY28.
The report points out a significant decrease in demand, dropping to about 3 percent in FY25 after three years of strong growth.
It is expected that demand will recover in 2HFY26, as a combination of a strong base and consistent government capital expenditure will lead to annual demand growth stabilizing in the 6-7 percent range over the forthcoming three years, according to the brokerage.
Potential risks include a sharp reduction in government capital expenditure, which is deemed unlikely, and a slowdown in the housing sector.
Analysts previously forecast that cement companies could benefit from the reduction of GST from 28 percent to 18 percent, potentially lowering cement prices by around 7-8 percent.
In addition, a report by BNP Paribas India published in July indicated that demand in the Indian cement sector is expected to rebound to 7-8 percent in FY26 and grow by 6 percent CAGR from FY26 to FY29, driven by structural factors.
Point of View
I affirm that the insights presented in the report are crucial for understanding the evolving landscape of India's cement sector. The anticipated growth reflects a broader economic trajectory that aligns with national infrastructure goals and government initiatives, positioning the country favorably in the global market.
NationPress
20/09/2025
Frequently Asked Questions
What is the expected annual growth rate for India's cement sector?
The cement sector in India is expected to see an annual growth rate of approximately 7% over the next three years.
Which companies dominate the cement market in India?
The top four companies currently hold 57% of the market share in India.
When are cement prices expected to rise?
Cement prices are projected to start increasing from November.
What is the forecast for EBITDA per ton?
EBITDA per ton is projected to grow at a 13% CAGR from FY25 to FY28.
What could impact the demand for cement in India?
Demand could be affected by a sharp decline in government capex or a slowdown in housing development.
