ICRA: Cement volumes to grow 7–8% in FY2027

Cement volumes are expected to remain on a steady growth trajectory in FY2027, supported by sustained demand from housing and infrastructure sectors, even as operating profitability is expected to come under pressure due to rising input costs and geopolitical tensions affecting fuel and freight, says Anupama Reddy, Vice President & Co-Group Head, ICRA. Growth is projected at 7–8% in FY2027, following a 9.2% YoY increase in volumes recorded in 11M FY2026.

“Cement volumes are expected to grow by 7-8% in FY2027, driven by sustained demand from housing and infrastructure sectors. In 11M FY2026, cement volumes are 9.2% higher year-over-year, backed by sustained demand from the housing and infrastructure sectors,” Reddy said.

ICRA further noted that the industry witnessed healthy profitability expansion in the previous fiscal, following an 11-17% expansion in OPBIDTA/MT to Rs. 900-950 per MT in FY2026. The operating environment is now expected to moderate in FY2027 due to cost pressures.

The cement sector is expected to face pressure on operating profitability in H1 FY2027 amid higher input costs. “The cement sector’s operating profitability is likely to face pressure in H1 FY2027 owing to an uptick in input costs-primarily fuel (petcoke and coal) and freight (diesel)-amid ongoing geopolitical tensions in West Asia,” it said.

ICRA added that profitability is expected to moderate in FY2027. “OPBIDTA/MT for FY2027 is expected to moderate by 6-11% to Rs. 820-870, while rising costs may prompt some price increase, but the same is likely to remain limited to 2-4% in FY2027 owing to constrained pricing flexibility,” she added.

Despite margin moderation and incremental debt requirements arising from ongoing capacity additions, credit metrics are expected to remain comfortable, supported by robust demand conditions. The sample set companies are also expected to maintain financial stability despite expansion-led funding needs.

“Cement volumes are expected to grow by 7-8% in FY2027, driven by sustained demand from housing and infrastructure sectors. In 11M FY2026, the cement volumes are higher by 9.2% YoY backed by sustained demand from the housing and infrastructure sectors. After witnessing a healthy expansion of 11-17% in OPBIDTA/MT to Rs. 900-950 per MT in FY2026, the cement sector’s operating profitability is likely to face pressure in H1 FY2027 owing to an uptick in input costs, primarily fuel (petcoke and coal) and freight (diesel), amid ongoing geopolitical tensions in West Asia. Consequently, OPBIDTA/MT for FY2027 is expected to moderate by 6-11% to Rs. 820-870. The downside risk will persist if high crude-linked fuel and logistics costs sustain for a long period. While rising costs may prompt some price increase, but the same is likely to remain limited to 2-4% in FY2027 owing to constrained pricing flexibility, keeping rising cost pressure an overhang for the sector. Despite moderation in profitability and incremental debt requirements for ongoing capacity additions, credit metrics for ICRA’s sample set are expected to remain comfortable, supported by robust volume growth. Cement volumes recorded a healthy YoY growth of ~9.2% in 11M FY2026, driven by sustained demand from the housing and infrastructure segments, a trend that is expected to continue in FY2027 with industry volumes projected to grow by 7-8%.” – Anupama Reddy, Vice President & Co-Group Head, ICRA.