Indian Cement Demand Projected to Grow 8% in FY27 Amid Capacity Expansion
India's cement demand is projected to expand by 8% year-on-year in FY27 to reach 520 million tonnes, accelerating from an estimated 6% growth rate in FY26. Government-funded housing and infrastructure initiatives, including rural housing under Pradhan Mantri Awaas Yojana-Gramin and urban development, are expected to serve as key drivers of this consumption surge.
Despite the stronger demand outlook, industry earnings may face headwinds due to significant supply additions and persistent energy cost pressures. A planned expansion of 132 million tonnes in nameplate capacity between FY26 and FY29 is expected to keep overall industry utilisation capped at around 73% in FY27 and 72% in FY28 and FY29. Additionally, elevated prices for petcoke and coal are weighing on profit margins, particularly in Western and Central India where oversupply risks remain higher.
Looking further ahead, cement demand is expected to reach 551 million tonnes in FY28 and 591 million tonnes in FY29. In the near term, market participants are watching for potential cement price increases and easing fuel costs, which could help lift profitability across the sector. Shree Cement Limited (NSE:SHREECEM) and Birla Corporation Limited (NSE:BIRLACORPN) remain key companies in focus as valuation levels hover near historical lows.
Key points
- India cement demand is projected to increase 8% year-on-year in FY27 to 520 million tonnes, supported by public housing and infrastructure.
- Capacity additions of 132 million tonnes from FY26 to FY29 are expected to hold industry utilisation around 72% to 73%.
- High coal and petcoke prices continue to weigh on operating margins in the near term.
- Shree Cement Limited (NSE:SHREECEM) and Birla Corporation Limited (NSE:BIRLACORPN) are listed among key sector opportunities.
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How we writeDisclaimerQuestions and answers
How much is Indian cement demand expected to grow in FY27?
Cement demand in India is projected to grow 8% year-on-year in FY27, reaching 520 million tonnes compared to 482 million tonnes estimated in FY26.
What factors are constraining cement industry margins in India?
A capacity expansion of 132 million tonnes between FY26 and FY29 is expected to keep utilisation near 72% to 73%, while elevated petcoke and coal costs continue to pressure profitability.
What is driving the growth in Indian cement consumption?
Consumption is primarily supported by government spending on infrastructure, rural housing under PMAY-G, urban housing under PMAY-Urban, and increased expenditure by state governments.