Indian cement makers project 7-8 percent volume growth in FY27, driven by infrastructure spending, housing demand, and urbanisation despite near-term challenges.
Geopolitical tensions have raised fuel and freight costs, squeezing margins; operating profit per tonne is expected to fall 6-11 percent to Rs 820-870.
Companies including UltraTech, Dalmia Bharat, and Ambuja Cements are stepping up capital expenditure, betting on strong long-term demand fundamentals.
India's cement industry is projecting a robust growth of 7-8 per cent in FY27, driven by strong government infrastructure spending, housing demand, and urbanisation, even as rising fuel costs linked to the West Asia crisis pose significant near-term challenges.
Demand Drivers and Growth Projections
The growth optimism is underpinned by sustained demand from both housing and infrastructure sectors, following a 9.2 percent year-on-year volume increase recorded in the first 11 months of FY26. Top executives from UltraTech Cement, Ambuja Cements, Shree Cement, and Dalmia Bharat have expressed confidence in medium-term demand, PTI reported. UltraTech's CFO Atul Daga noted the company would target double-digit growth, supported by urbanisation, affordable housing initiatives, and rural demand.
Ambuja Cements CEO Vinod Bahety projects consolidated volumes to grow approximately 8 per cent in FY27 to around 80 million tonnes. ICRA, a rating agency, has independently validated the industry outlook, forecasting 7-8 per cent volume growth for the fiscal year, PTI reported.
West Asia Crisis and Margin Pressures
The ongoing geopolitical tensions in West Asia have created "real headwinds" for the sector, according to Daga, particularly affecting fuel costs, freight expenses, and import-dependent supply chains. Power, fuel, and selling costs constitute 50-55 per cent of total operating costs for cement companies.
Industry margins are expected to remain under pressure, especially in the first half of FY27. ICRA estimates operating profit per tonne will moderate by 6-11 percent to Rs 820-870 in FY27, compared to Rs 900-950 in FY26. India Ratings and Research noted that delivered coal prices increased in double digits in March 2026, with pet coke price increases being even sharper due to supply disruptions from the Middle East.
Capex Expansion Amid Challenges
Despite near-term headwinds, cement companies are stepping up capital expenditure plans. According to PTI, UltraTech plans to invest Rs 8,000-10,000 crore annually for the next 4-5 years. Dalmia Bharat has outlined a capex of Rs 3,200-3,400 crore for FY27, while Nuvoco Vistas has earmarked Rs 900 crore.
Ambuja Cements is taking a more moderate approach, keeping FY27 capex at Rs 6,000-6,500 crore, down from Rs 7,500 crore last year, focusing on completion of existing projects rather than new commitments.
The sector is also betting on premiumisation and improved trade mix to lift sales realisations even in a stable pricing environment. UltraTech reported grey cement pricing strengthened about 2.5 percent across most geographies, supported by these factors.
