ICRA:  Cement volumes to expand by 6-7% in FY2027

Rating agency ICRA projects India’s cement industry to record 6-7% volume growth in FY2027, supported by sustained demand from housing and infrastructure sectors, following a 6.5-7.5% rise in FY2026 (on a higher base in H2 FY2025). Cement demand remained strong, with volumes expanding by 8.5% in 8M FY2026, aided by robust construction activities. With post‑monsoon construction expected to pick up pace, a sequential improvement in demand is likely to take place in H2 FY2026. Additionally, GST reduction on cement, along with continued focus of the Government on infrastructure spending, is expected to bolster demand momentum through FY2026 and FY2027. Amid healthy demand prospects, major cement companies are expanding capacities through both organic and inorganic routes to further strengthen their market share. The industry is expected to add 42-44 million MTPA capacity in FY2027, after 43-45 million MTPA capacity addition in FY2026.

Giving more insights, Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, ICRA, said, “In FY2026, the Indian cement industry is expected to maintain a healthy growth trajectory of 6.5–7.5%, supported by sustained infrastructure spending and robust residential demand. In FY2026, the profitability is projected to improve significantly, with OPBITDA/MT rising to ₹900–950/MT from the lows of Rs. 810/MT in FY2025, aided by better pricing and higher volumes. Entering FY2027, the industry is poised for steady growth of 6–7%, underpinned by continued demand from the housing and infrastructure sectors.”

She further added, “Some regions such as North and Central India are likely to witness higher capacity utilisation than the national average of about 70%, while the southern region may continue to witness relatively moderate utilisation due to capacity overhang. Recent merger and acquisition (M&A) activities in South India — including acquisitions of Penna Cement and Orient Cement by the Adani Group and India Cements by UltraTech — have enhanced the regional and pan‑India presence of these large players. Overall, capacity utilisation of the industry is projected to remain stable at 70-71% in FY2027, similar to FY2026, on an expanded base.”

ICRA expects cement prices to rise by 2-4% on an average in FY2027, following a 3-5% increase in FY2026, supported by strong demand; this comes on the back of a 7% decline in FY2025 on account of muted activities in H1 FY2025. Blended realisations have already increased by ~5% in 8M FY2026 on a YoY basis, with upward revisions across most regions except the West. On the other hand, input prices are expected to see a marginal uptick in FY2027, resulting in some moderation in earnings. Moreover, input prices, especially pet coke and freight, are linked to global crude prices, which in turn are exposed to international geopolitical dynamics and commodity price movements.

“ICRA maintains a Stable outlook for the cement sector. The OPBIDTA/MT for ICRA’s sample set of cement companies¹ is estimated to moderate slightly to Rs. 880-930/MT in FY2027, after a 12-18% increase in FY2026 to Rs. 900-950/MT, driven by rising input costs. Despite this correction, the credit profiles of large cement producers are expected to remain stable, driven by a healthy growth in operating income, steady operating margins and comfortable leverage metrics.” Reddy added.

¹ ICRA’s sample includes ACC (ACC), Ambuja Cements (ACL), JK Cements (JKCL), JK Lakshmi Cement (JKLC), The Ramco Cements (RCL), UltraTech Cement (UCL), Dalmia Bharat (DBL), Birla Corporation (BCL), Shree Cement (SC), Sagar Cements (SCL), and Heidelberg Cement India (HCL), which cumulatively account for 74% of industry capacity.