India’s cement industry continues its growth streak in FY26, with May 2025 marking a significant uptick in production and pricing. According to ICRA, cement volumes in May rose by 9% year-on-year (YoY) to touch 39.6 million metric tonnes (MT), buoyed by continued demand from the housing and infrastructure sectors. Average cement prices also climbed by 8% YoY, bringing the rate to ₹360 per 50-kg bag.
📊 Key Highlights at a Glance
- Cement volume in May 2025: 39.6 million MT, up 9% YoY
- FY26 total output projection: 480–485 MT
- Average retail price: ₹360 per bag, up 8% YoY
- Operating margins expected to reach 16.3–17.0%
- Fuel inputs: Coal down 19%, diesel stable at ₹88/litre
🏗️ Demand Fueled by Housing and Infrastructure
The government’s continued push through large-scale infrastructure projects and affordable housing schemes like Pradhan Mantri Awas Yojana (PMAY) has provided a solid foundation for cement demand. These initiatives have led to a consistent rise in dispatches—78.7 million MT in April–May FY26, reflecting an 8% YoY growth.
This aligns with broader projections of a 6–7% YoY growth in overall volumes for FY26, underpinned by urban development, public infrastructure, and rural housing.
📈 Price Recovery Signals Market Strength
After witnessing a 7% dip in FY25, cement prices have staged a rebound in the current fiscal. May’s average price stood at ₹360 per bag—registering a robust 8% YoY increase. The price hike is largely attributed to:
- Stronger demand across Tier I and II cities
- Stabilization of freight and logistics expenses
- Improved pricing discipline by manufacturers
As a result, operating margins are expected to improve by 80–150 basis points, reaching 16.3–17.0%, boosting profitability for major industry players.
🔥 Input Cost Trends: Favorable Tailwinds
Lower energy and fuel costs have emerged as a crucial tailwind:
| Input | June 2025 Price | YoY Change |
|---|---|---|
| Coal | $100/MT | ↓ 19% |
| Petcoke | ₹10,880/MT | ↓ 2% |
| Diesel | ₹88/litre | Flat |
The steady decline in coal and petcoke prices has offset part of the rise in raw material costs, further contributing to margin expansion.
🏭 Installed Capacity and Utilization Trends
India’s total installed cement capacity reached 690 MT, as per Cement Manufacturers’ Association (CMA). The utilization rate is projected at 70% in FY26, maintaining a balance between new capacity additions and robust demand.
Notably, eastern and northern India are leading in capacity expansions, collectively expected to add 22–24 million MT by the end of FY26.
📍 Regional Insights and Market Share
While all-India averages show a positive trend, regional performance varies:
- Northern and Eastern regions have posted stronger pricing and higher utilization
- Southern states, in contrast, are facing price pressure due to oversupply and intense market competition
Major players like UltraTech Cement, Shree Cement, and Ambuja Cements have demonstrated YoY volume growth above the industry average. For instance, UltraTech posted a 10% rise in Q4 FY25 volumes.
🌦️ Seasonal Lull Ahead
Despite the positive outlook, the upcoming monsoon months may lead to temporary slowdowns in construction activity. Analysts expect a short-term dip in demand and prices, especially in rural areas, but anticipate a recovery by Q3 FY26.
📈 Market Confidence and Stock Movements
Investor sentiment remains optimistic, with cement stocks reflecting renewed confidence. Key players such as ACC, JK Lakshmi Cement, and Shree Cement have seen up to 6% stock appreciation in the final week of June 2025.
🔮 The Road Ahead
The cement industry is expected to maintain its upward trajectory in FY26, supported by:
- Infrastructure push from the government
- Revival of real estate demand
- Stable cost structures
- Timely monsoon and demand recovery in H2 FY26
However, stakeholders must keep a watchful eye on geopolitical developments, global commodity prices, and logistical cost volatility.
