Cement makers forecast a concrete comeback in FY26

India's cement industry is likely to make a notable rebound this fiscal year in both volume growth and pricing, say large cement producers. This would mark a relief for the industry which borne the brunt of tepid growth and weak pricing power in FY25.

“FY26 should be far, far better than FY25,” Vinod Bahety, chief executive officer at Adani Cement told analysts recently. “In fact, FY25, if you slice it, the first 9 months and the last, say, 3 months, you will find the key differentiations already and that March '25 quarter is also spilling over to now, say, June as well,” he said.

Anchored by increased outlay by the Union government and higher spending on housing in rural markets, cement makers expect consumption of the construction material growing in high single digits in FY26. Sales grew by a lower-than-average 4%, hit by extreme weather conditions, and an overall slowdown in infrastructure spending ahead of the general election.

“Given the government’s focus on infrastructure and housing projects, along with increased rural and urban demand, a sustainable volume growth of 7- 8% is expected, going forward,” UltraTech Cement, India’s largest cement producer, said in a statement.

The Aditya Birla Group company—having a more than a fourth of the industry’s total capacity of 655 million tonnes, and about a fourth of the market share, is confident of strong volume growth. “We expect to grow in double digits this year on a higher base,” chief financial officer Atul Daga told analysts after quarterly earnings.

The Centre has earmarked Rs 11.21 lakh crore as capital expenditure for this fiscal, a 10% increase from last year. Rural housing and infrastructure collectively make up two-thirds of total cement demand in the country.

India—the world’s second-largest market for cement—has seen a robust growth in demand over the last few years. This, in turn, also led to most companies aggressively expanding their capacities. The last one year also saw several buyouts including India Cements, Penna Cement, Orient Cement, and Vadraj Cement.

“Looking ahead, I expect consolidation to continue, driven not only by acquisitions but also by organic expansion as larger players scale up capacity more rapidly than the other smaller companies,” said Puneet Dalmia, CEO, Dalmia Bharat to analysts. “Over the next two years, the top four companies are likely to account for about 60% of the industry's total capacity.”

While the cement industry typically sees capacity buyouts in quick succession, the current phase, with about 11% of installed capacity changing hands, is the highest ever in two years, Crisil Ratings said in a recent report.

While consolidation will remain on the radar of companies, the focus on organic expansion is likely to be sharper, management commentary indicated.

“My focus will be more in terms of the organic growth to achieve this 20 million ton additional, which we are expecting in '26, but not that we are averse to any M&A if it is coming at the right opportunity,” said Bahety at Adani Cement.