India Cement Industry Sees Uneven Growth Amid Inflation

India’s cement industry is heading towards a gradual demand recovery, but rising fuel and freight expenses could limit earnings growth in the coming quarters. Cement producers are expected to record volume growth of 6.3% year-on-year in the September quarter of FY27, even as monsoon disruption and labour shortages weigh on construction activity. The trend highlights a growing gap between material demand and the industry’s ability to convert sales into profits.

Sector estimates indicate that cement volumes could decline 7.6% sequentially in Q2FY27, reflecting the seasonal slowdown in building activity. Demand is expected to improve in the second half of the financial year as rainfall recedes and infrastructure projects resume at a faster pace. The projected recovery will matter for housing construction, road development and public infrastructure, where cement remains a core input. However, the benefits may be uneven if higher material costs and subdued pricing continue to affect construction budgets. The industry faces pressure from higher prices of petroleum coke, coal, diesel and freight. These expenses have increased following inflationary pressures linked to the West Asia crisis, leaving manufacturers with limited room to protect margins while competition remains intense.Average earnings before interest, tax, depreciation and amortisation (EBITDA) per tonne across the covered companies are projected at around ₹701 in Q2FY27, down from ₹879 a year earlier. The decline suggests that stronger sales volumes alone may not be enough to restore profitability.

Large, integrated cement producers could be better positioned to manage the pressure because of their operating scale, access to raw materials and more efficient logistics. Smaller producers and companies operating in highly competitive markets may face greater difficulty passing additional costs on to customers. Market checks indicate that cement prices across India remained broadly unchanged from the previous quarter. Attempts to raise prices have struggled to hold amid weaker seasonal demand and competition between manufacturers.Non-trade cement prices, which apply to bulk purchases by institutional buyers and contractors, fell by around ₹15–20 per bag in some eastern and central markets. The decline signals that manufacturers continue to face resistance to price increases, even as operating expenses rise. Realisation, or the average revenue earned per tonne of cement sold, is projected to increase by around 5% in FY27. However, a sustained improvement will depend on stronger demand, higher capacity utilisation and reduced competitive pressure.

Cement demand is expected to grow by 6–7% in FY27, supported by housing, infrastructure investment and post-monsoon construction. Yet, around 50 million tonnes of additional annual production capacity is expected to enter the market during the year, potentially limiting pricing power in some regions. For cities, the balance between construction demand and material costs has wider implications. Expensive building inputs can strain project budgets, affect housing affordability and increase pressure on public infrastructure spending.A gradual improvement in cement prices and operating efficiency could support a recovery in the coming quarters. However, stable fuel costs, disciplined capacity expansion and more efficient transport will remain important to sustaining growth without adding unnecessary costs to India’s urban development.

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India Cement Industry Sees Uneven Growth Amid Inflation