India’s cement industry is poised for steady growth in FY2027, following a strong performance in FY2026, according to rating agency ICRA. The agency expects volumes to expand by 6–7%, driven by sustained demand from the housing and infrastructure sectors. This comes after a projected 6.5–7.5% increase in FY2026, which itself followed a higher base in H2 FY2025.
Cement demand has remained resilient, with volumes rising 8.5% in the first eight months of FY2026, reflecting robust construction activity across residential and infrastructure projects. With post-monsoon construction picking up pace, a sequential improvement in demand is anticipated in H2 FY2026. Additionally, policy support such as GST reduction on cement, along with continued government focus on infrastructure spending, is expected to maintain momentum through FY2027.
To capitalize on growing demand, major cement companies are expanding capacities through both organic and inorganic routes. ICRA estimates that the industry will add 42–44 million metric tonnes per annum (MTPA) in FY2027, following 43–45 million MTPA capacity addition in FY2026. This expansion is aimed at strengthening market share and meeting regional demand.
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. Profitability is projected to improve significantly, with OPBITDA per tonne rising to ₹900–950 from 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 housing and infrastructure sectors.”
Reddy highlighted regional differences in capacity utilization. North and Central India are likely to witness higher utilization rates than the national average of around 70%, while southern markets may experience moderate utilization due to capacity overhang. Recent mergers and acquisitions, such as Adani Group’s acquisition of Penna Cement and Orient Cement, and UltraTech’s acquisition of India Cements, have strengthened the pan-India presence of large players, helping stabilize regional dynamics. Overall, industry-wide capacity utilization is projected to remain stable at 70–71% in FY2027.
Cement prices are expected to rise by 2–4% on average in FY2027, following a 3–5% increase in FY2026. This comes after a 7% decline in FY2025 due to muted construction activity in the first half of the year. Blended realizations have already increased by approximately 5% year-on-year in the first eight months of FY2026, with upward revisions across most regions except the West.
However, rising input costs could moderate earnings growth slightly in FY2027. Prices of key inputs such as pet coke and freight are linked to global crude prices, which are sensitive to geopolitical developments and commodity market volatility.
“ICRA maintains a Stable outlook for the cement sector. OPBITDA per tonne for our sample set of cement companies 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, supported by healthy operating income growth, steady margins, and comfortable leverage metrics,” Reddy added.
Overall, India’s cement sector is set for measured but sustainable growth over the next fiscal year. With continued infrastructure development, residential construction, capacity expansion, and moderate price increases, the industry is expected to maintain profitability and stability, even as input costs rise. Investors and market watchers are likely to keep a close eye on regional capacity dynamics and pricing trends, which will shape profitability and competition in FY2027.
The sector’s outlook suggests a mature and stable growth path, with large producers benefiting from both rising demand and strategic expansions, while smaller players may face pressure from capacity overhang and cost volatility. With the government’s ongoing investment in infrastructure and housing, the cement market appears well-positioned for a steady 2027.
