India’s cement industry is on track for its most significant expansion in years, with 80–85 million metric tonnes (MT) of new capacity expected to be added over the next two financial years, according to a report by ICRA. Cement production is projected to reach 480–485 MT in FY2026—up 6–7% year-on-year—after growing by 6.3% to 453 MT in FY2025, driven by strong demand from the housing sector and government infrastructure initiatives.
ICRA anticipates 40–42 MT of new capacity to become operational in FY2026, compared to 31 MT in FY2025. The eastern region is expected to lead this expansion, contributing around 14–15 MT of new grinding capacity. However, despite the capacity increase, industry-wide capacity utilisation is likely to remain near 70% due to the higher production base.
Nationwide cement prices averaged around ₹340 per 50 kg bag in FY2025, down from ₹365 the previous year, largely due to weak demand in the first half of the year. Producers raised prices by 4–5% in the second half, and ICRA expects another 3–5% price increase in FY2026. Input costs are expected to remain relatively stable, although fluctuations in petcoke and freight costs—both linked to global crude oil—pose potential risks.
Operating margins are forecast to improve by 80–150 basis points, reaching 16.3–17.0% in FY2026. For ICRA’s sample of large cement companies, operating profit before interest, tax, depreciation, and amortisation (OPBITDA) per tonne is expected to grow by 10–14%, reaching ₹880–920. Revenue for these major players is projected to rise 12–14%, supported by 8–9% growth in volumes and firmer prices.
Despite ambitious capital expenditure plans, the sector’s overall debt is expected to decline by 7–8% in FY2026 as large firms continue to repay and prepay loans. Consequently, leverage (measured as total debt to OPBITDA) is projected to improve to 1.2–1.3 times, while debt service coverage ratio (DSCR) is expected to strengthen to approximately 3.4–3.5 times.
Leading companies such as UltraTech Cement, ACC, Ambuja Cements, Shree Cement, Dalmia Bharat, JK Cement, and Ramco Cements are forecast to outperform in terms of revenue and profitability. In contrast, smaller players may face challenges related to margin pressure and funding constraints in a volatile pricing environment.
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