India's Cement Demand To Grow 6-7% In FY2026, Reaching Up To 485 Million Tonnes: ICRA

(MENAFN- KNN India) New Delhi, Jul 4 (KNN) India's cement industry is expected to experience robust growth in FY2026, with cement volumes projected to increase by 6-7 per cent year-on-year to reach 480-485 million metric tonnes (MT), according to a recent report by ICRA.

This anticipated expansion is attributed to sustained demand from the housing and infrastructure sectors, supported by a strong pipeline of capacity expansions across the industry.

The industry demonstrated solid performance in FY2025, recording a 6.3 per cent volume growth with overall cement output reaching 453 million MT.

Building on this momentum, capacity additions for the upcoming fiscal year are estimated at 40-42 million metric tonnes per annum (MTPA), representing a significant increase from the 31 MTPA added in FY2025.

The eastern region is expected to lead capacity augmentation efforts, with 14-15 MTPA of new grinding capacity planned for the region.

Despite the substantial increase in output, capacity utilisation is projected to remain stable at approximately 70 per cent due to the expanded production base.

This balanced approach to capacity expansion is expected to maintain operational efficiency while meeting growing demand across key sectors.

Pricing dynamics are expected to show modest improvement following a challenging period in FY2025. Average PAN India cement prices declined to Rs 340 per bag in FY2025 from Rs 365 in FY2024, primarily due to subdued demand in the first half of the fiscal year.

However, with price corrections of 4-5 per cent observed in the second half of FY2025, ICRA estimates a further 3-5 per cent price increase in FY2026.

Operating profitability metrics are projected to strengthen significantly, with operating profitability per tonne (OPBITDA/MT) expected to rise by 10-14 per cent to Rs 880-920.

This improvement is anticipated to boost overall operating margins by 80-150 basis points to 16.3-17.0 per cent, reflecting enhanced operational efficiency and improved pricing power.

Financial health indicators for major cement producers are expected to remain robust despite heavy capital expenditure commitments.

Major cement companies are projected to reduce their debt load by 7-8 per cent through strategic repayments and prepayments, helping maintain strong financial positions.

Leverage levels are forecast to improve, with total debt to OPBITDA ratios expected at 1.2-1.3x and debt service coverage ratios (DSCR) at 3.4-3.5x, indicating healthy financial management across the sector.

(KNN Bureau)

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