NEW DELHI: India’s cement demand is set to expand at a 7–8% compound annual growth rate over the medium term, powered by housing, infrastructure, and commercial projects, with prices expected to rebound after a sharp fall in FY25, UBS said in a report.
UBS noted that while price hikes could be modest due to significant capacity additions in FY26–27, long-term fundamentals remain strong. “We expect cement prices to rebound after a sharp fall in FY25, although price hikes could be modest, considering strong capacity additions in FY26-27. We remain positive on the long-term outlook for margins and return ratios, given the sector's strong consolidation trend,” the report said.
New cement capacity is expected to pick up across regions starting in the last quarter of FY25. UBS highlighted that demand will likely outpace GDP growth. “We remain constructive on demand and expect volume to grow 1.0-1.2x the rate of growth in real GDP over the medium term. We see margin tailwinds and expect costs to keep coming down in the next two to three years,” it added.
Eastern demand weakens, southern prices rise
Cement prices are expected to improve in FY26 and FY27, after sliding sharply in FY25. In August, prices stayed flat month-on-month but were higher year-on-year.
Regional trends showed a divergence: The eastern market saw demand slump due to early rains, though prices held steady at Rs 353 per bag, while the southern market posted a Rs 10 per bag increase despite the monsoon.
The seasonal slowdown in construction activity during the rains, particularly in rural housing and infrastructure projects, curbed offtake and limited companies’ ability to raise or sustain prices, reported ANI.
According to the ministry of commerce & industry, India’s cement production rose 11.7% in July 2025, while April–July FY26 output was up 8.9% year-on-year, highlighting strong supply in the country’s cement industry.
UBS noted that while price hikes could be modest due to significant capacity additions in FY26–27, long-term fundamentals remain strong. “We expect cement prices to rebound after a sharp fall in FY25, although price hikes could be modest, considering strong capacity additions in FY26-27. We remain positive on the long-term outlook for margins and return ratios, given the sector's strong consolidation trend,” the report said.
New cement capacity is expected to pick up across regions starting in the last quarter of FY25. UBS highlighted that demand will likely outpace GDP growth. “We remain constructive on demand and expect volume to grow 1.0-1.2x the rate of growth in real GDP over the medium term. We see margin tailwinds and expect costs to keep coming down in the next two to three years,” it added.
Eastern demand weakens, southern prices rise
Cement prices are expected to improve in FY26 and FY27, after sliding sharply in FY25. In August, prices stayed flat month-on-month but were higher year-on-year.
Regional trends showed a divergence: The eastern market saw demand slump due to early rains, though prices held steady at Rs 353 per bag, while the southern market posted a Rs 10 per bag increase despite the monsoon.
The seasonal slowdown in construction activity during the rains, particularly in rural housing and infrastructure projects, curbed offtake and limited companies’ ability to raise or sustain prices, reported ANI.
According to the ministry of commerce & industry, India’s cement production rose 11.7% in July 2025, while April–July FY26 output was up 8.9% year-on-year, highlighting strong supply in the country’s cement industry.
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