India�s Cement Sector Poised For Expansion, Capacity Boost Ahead

With large capital expenditure (capex) planned by the financial year 202728, along with new grinding capacity, India’s cement industry is set for a major expansion, boosting capacity and supply chain efficiency.Axis Direct, in a report, noted that with demand projected to rise 6 to 8 per cent compounded annual growth rate (CAGR) over the next two years, fuelled by infrastructure, housing and commercial real estate, strong government spending through FY26 and FY27 will further support volume growth. “The Indian cement sector in FY26–FY27 will benefit from sustained infrastructure spending, healthy rural demand, lower tax rates, and a bullish capacity addition pipeline. Despite seasonal dips, the medium-term viewpoints to stable pricing, resilient earnings, and robust investment opportunities for investors aligned with India’s growth vision,” the report pointed out. Industry Consolidation, cost efficiencies and operational improvements are set to boost margins over the medium term, even with seasonal fluctuations, the report added. Lower goods and services tax (GST), increased infrastructure spending, and a revival in realty and rural housing create a favourable backdrop for long-term profits.After witnessing elevated prices in Q1FY26, cement prices corrected marginally in Q2FY26 and declined further by another 1 to 2 per cent in Q3FY26, driven by heightened competition and GST rationalisation. Cement prices recorded their steepest decline in over a decade during FY25, exerting pressure on margins and cash flows amid elevated capex. The report added that robust volume growth is expected to continue into Q3FY26, supported by housing demand and government-led infrastructure spending. Cement demand in Q3FY26 is expected to record 11 per cent YoY growth for its coverage universe, driven by stronger infrastructure activity and affordable housing demand. Rural demand is likely to outperform urban markets, supported by above-average monsoon conditions and wage growth, while sustained infrastructure spending continues to underpin overall volumes. Core sector data released by the central government confirms a 9 per cent YoY growth in cement output during October to November 2025, driven by robust activity in infrastructure and construction. Despite seasonal monsoon headwinds, H1FY26 recorded an 8 per cent YoY surge in dispatches. This sustained volume growth indicates a strong and consistent pickup in market demand, the report mentioned.