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Cement volumes in India are expected to grow by 6-7 per cent year-on-year (YoY) in FY2026, reaching around 480-485 million metric tonnes (MT), a new report said on Monday. 

This growth is expected to be driven by continued demand from the housing and infrastructure sectors, according to ICRA's latest report.

In FY2025, the industry recorded a volume growth of 6.3 per cent, reaching 453 million MT.

The outlook for FY2026 remains strong as both government-led infrastructure projects and private housing construction continue to create steady demand for cement.

The report also noted that cement manufacturers are planning to add new capacity of around 40-42 million MT per annum (MTPA) in FY2026, higher than the 31 MTPA added in FY2025.

The eastern region is expected to lead this capacity expansion with the addition of 14-15 million MTPA.

Despite the rise in capacity, the average capacity utilisation rate is likely to stay stable at around 70 per cent due to the expanded base.

Cement prices, which had declined in FY2025 due to weak demand in the first half, are expected to improve in FY2026.

Average pan-India prices were Rs 340 per bag in FY2025, down from Rs 365 in FY2024. However, a 3-5 per cent increase in prices is projected for FY2026.

Industry players had already raised prices by 4-5 per cent in the second half of FY2025 compared to the first half.

Input costs, including petcoke and freight, are expected to remain stable, although they remain sensitive to global crude prices and geopolitical developments.

Thanks to the expected rise in prices and steady input costs, operating margins in FY2026 are projected to improve by 80-150 basis points to 16.3-17 per cent.

Operating profits per tonne (OPBITDA/MT) are likely to grow by 10-14 per cent to reach Rs 880-920 per MT.

The report highlights that leading cement companies are likely to outperform the broader industry in terms of revenue and volume growth.

For ICRA’s sample set of major players, revenue is projected to grow by 12-14 per cent, supported by 8-9 per cent growth in volumes and a 3-5 per cent increase in average prices.

In terms of financial health, the report also provides a positive outlook. Despite high capital expenditure requirements, leading cement companies are expected to reduce their overall debt by 7-8 per cent in FY2026 through repayments and pre-payments.

As a result, key debt protection metrics such as leverage (Total Debt/Operating Profit) and debt coverage (DSCR) are expected to improve to 1.2-1.3x and 3.4-3.5x, respectively.