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Rating agency ICRA in its latest report has said that the cement sector has witnessed a muted growth of 2-3 per cent in the first quarter of current fiscal (Q1FY25) on account of a slowdown in construction activity because of the Lok Sabha polls. However, the overall volumes for the FY2024-25 are likely to expand by 7-8 per cent driven by a healthy demand from the infrastructure and housing sectors.

The report said nevertheless, the government's focus on infrastructure projects, sanction of additional houses under the Pradhan Mantri Awas Yojana (PMAY), and the industrial capex is expected to meaningfully improve cement volume offtake in H2 FY2025. It also projects further consolidation in the cement industry by the top players to increase their capacity. Besides, the sector is also expected to continue its organic growth in the medium term as makers continue to invest to expand capacity. While organic growth is expected to continue in the medium term, cement companies are also preferring the inorganic route to boost capacities rapidly.

ICRA estimates that the market share of the top five cement companies witnessed a steep rise to 54 per cent as of March 2024 from 45 per cent as of March 2015 and projects it to further increase to 58-59 per cent by March 2026, resulting in consolidation in the cement industry. Moreover, the cement companies may also witness an improvement in their operating profit by 1-3 per cent due to softened raw materials prices.