Cement volumes are expected to grow by 7-8% in FY2027, driven by sustained demand from housing and infrastructure sectors. The operating margins are likely to moderate by around 200-400 bps in FY2027 on account of increase in input costs, with further downside risk from the impact of the ongoing West Asia conflict on crude-linked petcoke and freight prices.

Cement volumes: In 11M FY2026, the cement volumes are higher by 9.2% YoY backed by sustained demand from the housing and infrastructure sectors. ICRA expects cement volumes to grow by 8-9% to about 490 million MT in FY2026 and 7-8% in FY2027, given continued steady demand from end-user industries.

Supply addition: The capacity addition is expected to increase by 47-49 million MTPA1 in FY2026 and 35-37 million MTPA in FY2027, driven by healthy demand prospects. In FY2027, the eastern region is likely to lead the grinding capacity expansion with the addition of 10-11 million MTPA capacity. Capacity utilisation is estimated to settle at 70-72%, reflecting a trend similar to the around 72% utilisation recorded in FY2026.

Exhibit 1: Trends in cement production (in million MT)

Source: Office of Economic Advisor, Index of Core Industries