Indian cement industry’s volume is likely to grow by 8-9 per cent in the second half of FY26, led by pent-up demand and better liquidity, a Crisil Intelligence report said
The report stated that the industry’s margins are expected to grow by 250-300 basis points, aided by factors such as higher realisation, stable costs, a GST cut, premiumisation, and volume growth, leading to a pressure release for manufacturers.
Crisil Intelligence noted that in the first half of FY26, volume grew a moderate 5 per cent YoY, rebounding after flatlining in the same period last fiscal. However, the report adds, in H2 FY2 volume is seen rising 8-9 per cent on-year, fuelled by pent-up demand from the first half and better liquidity.
Cement price to rise by 3-4%
The report also said that average pan-India cement prices are expected to remain range-bound at Rs 354-359 per 50 kg bag.
Crisil said that the reduction in GST rate from 28 per cent to 18 per cent on cement will exert downward pressure on retail prices. However, the agency noted, premiumisation will offset the pressure and, together with higher demand, aid an improvement in realisations for the manufacturers.
Excluding GST, cement prices are estimated to rise 3-4 per cent year-on-year in the coming quarter. The report added that the reduction in GST is expected to lead to a decline in overall prices.
“The average pan-India cement prices saw a modest 3% on-year increase during the first half of this fiscal. However, we anticipate the full impact of the GST reform will be realised in the third quarter, leading to a 4-5% decline in retail prices in the second half of the fiscal. Despite subdued pricing, the industry is poised for higher realisations this fiscal, driven by healthy volume growth.”Sehul Bhatt, Director, Crisil Intelligence, said.
Cement cost increase
On the cost angle, Crisil Intelligence noted that power and freight costs, which together comprise 54-55 per cent of the total expenses, are projected to fall 2-3 per cent and 1-2 per cent, respectively, this fiscal.
The report added that raw material costs are likely to remain elevated because of higher limestone prices. However, overall costs are expected to be stable, resulting in an expansion in operating margin to 18-20 per cent from 16 per cent last fiscal.