Indian cement sector to grow 7-8%, large firms to dominate: Report

The Indian cement industry is projected to grow by 7-8% this fiscal year, with large companies set to dominate, a Systematix Research report finds. Recovering demand and price hikes support growth, though rising input costs create a cautious outlook.

The Indian cement industry is expected to grow by 7-8 per cent in the current financial year, with large companies continuing to dominate the sector, according to a report by Systematix Research.

Market Dynamics and Demand Recovery

The report noted that major players account for nearly 65 per cent of the industry's total capacity and are likely to benefit the most due to their scale and operational efficiency. "We believe large players are well placed to benefit meaningfully, given their scale, cost efficiency and operational flexibility," the report said.

Cement companies under Systematix coverage are projected to report around 8 per cent year-on-year volume growth in the March quarter (4QFY26), supported by improving demand after a relatively weak first half of the fiscal year. "Demand recovery is being driven by sustained growth in individual housing and a pick-up in the non-trade segment," the report said.

Company-wise Growth Projections

Among companies, Ultratech Cement and Ambuja Cement are expected to lead volume growth at 12 per cent and 10 per cent, respectively, aided by the optimisation of acquired assets. JK Cement is likely to see stronger growth of about 14 per cent on a lower base. In contrast, Shree Cement and Ramco Cements may report slower growth of around 2 per cent. Other players such as ACC, Dalmia Bharat and Nuvoco Vistas are expected to post growth in line with the industry average of 6-8 per cent.

Price Hikes and Financial Outlook

Cement prices increased during the quarter, with companies implementing hikes from January onwards. This is likely to result in a 2-3 per cent quarter-on-quarter rise in realisations. Price increases were strongest in the southern and eastern regions, while northern, western and central markets remained stable.

Improved pricing and strong volumes are expected to offset rising input costs. The report estimates year-on-year growth of 8 per cent in volume, 13 per cent in revenue, 11 per cent in EBITDA and 3 per cent in profit after tax for the sector in 4QFY26.

Cost Pressures and Near-Term Risks

Operational costs are expected to decline slightly, with expenditure per tonne likely to fall by around Rs 30 sequentially due to better efficiencies and operating leverage. Despite rising global energy prices due to geopolitical tensions in West Asia, companies are unlikely to face an immediate impact as they have sufficient inventory till May. However, other expenses may increase due to a shortage of polypropylene bags.

The report maintained a cautious near-term outlook due to uncertainty in input costs. It also warned that diesel prices could rise significantly after elections, potentially putting pressure on margins. The report added that the sustainability of recent price hikes and volatility in energy costs will remain key factors to watch going forward.

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