Cement Market Dynamics: Weathering Growth and Price Challenges

Cement demand experienced a notable 7% year-on-year increase in April, but the industry faces potential challenges with the early arrival of the monsoon season, according to a report by Ind-Ra, a rating agency.

Despite this, single-digit demand growth is anticipated for the June quarter, due in part to a low base effect from general elections the previous year. The March quarter in 2025 saw a significant revival in cement volumes, posting a 10-11% y-o-y recovery after muted growth earlier in the fiscal year.

The late recovery, mainly driven by an 11% increase in infrastructure spending, was propelled by central government capital expenditure. However, the yearly growth remains between 5-6%, marking the lowest since the pandemic-affected FY21. Price adjustments have partially benefited manufacturers' sales realisations in Q1 FY26. Despite price recoveries, the year-on-year realisation in the 4Q FY25 stayed lower due to aggressive market competition, particularly impacting Southern India.

The overall sector utilisation for FY25 slightly decreased to 75%, and consolidation processes are ongoing as major players snap up smaller firms. A performance gap has emerged between larger and smaller cement players, with the former maintaining stable financial bases while smaller competitors face tighter credit situations. This has been reflected in overall profitability, with median EBITDA for Tier 1 companies dropping by 20% and Tier 2 players seeing over 50% losses. Crucial acquisitions in the Southern region underscore the ongoing consolidation trend within the industry.

(With inputs from agencies.)