Cement sector outlook turns positive amid rising demand: Nuvama Research

Increased government capital expenditure, particularly at the state level, supports this demand growth. While FY25 capex growth slowed compared to previous years, planned increases for FY26 suggest continued sector momentum.

The outlook for the Indian cement sector is improving as both demand and prices are likely to rise in the coming months, according to a report by Nuvama Research. The report highlighted that the sector may benefit from a low base in FY25 and better demand conditions going forward.

It said, "We believe the outlook for the cement space is improving as both volumes and prices are likely to log an uptick going ahead, aided by a low base of FY25E".

In May 2025, cement prices saw an increase across all regions, with the southern region leading the trend, followed by the eastern, central, and western markets. This price hike was mainly driven by an improvement in demand.

However, the report also noted that dealers expect a partial rollback of the recent price increases towards the end of May.

The improvement in demand has been supported by increased capital expenditure (capex) by both the central and state governments.

Although central government capex was down 12 per cent year-on-year in the first eight months of FY25, it recovered and grew by 8 per cent for the full financial year.

Similarly, state government capex rose by 9 per cent in FY25. Several major states have also planned higher capital spending for FY26, which is expected to support cement demand further.

The report mentioned that cement demand was relatively weak in April 2025 after strong performance in the fourth quarter of FY25. Capital spending, which was subdued during the first nine months of FY25, picked up significantly in the final quarter.

However, for the full year, capex growth remained lower compared to previous years. Central government capex grew only around 8 per cent in FY25, down from over 20 per cent growth seen in FY23 and FY24.

State government capex also slowed to 9 per cent in FY25, compared to 27 per cent growth in FY24.

Data from eight key states shows that, with the exception of Maharashtra, all have budgeted higher capex for FY26, ranging from 12 per cent to 69 per cent.

Meanwhile, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed that the index of eight core industries recorded a marginal recovery, rising about 4 per cent year-on-year in March 2025. However, the growth still remains weak compared to previous years.

Overall, Nuvama Research expects the cement sector to gain momentum in the coming quarters, supported by improving demand and better pricing.