Merger and acquisition activity in the cement sector is likely to remain muted through at least the first half of 2026, as the country’s largest producers prioritise integration of earlier acquisitions over fresh deal-making, analysts and industry watchers said.
After an intense two-year period of consolidation led by the Adani Group‘s cement arm and market leader UltraTech Cement, calendar 2025 saw a sharp slowdown in transaction activity. The only notable exception was Adani’s acquisition of Jaypee Group’s cement assets through the insolvency process, underscoring the broader pause in large-ticket deals.
What does this showdown reflect?
The slowdown reflects a strategic shift rather than a lack of intent. Both major groups are now focused on absorbing assets acquired over the past few years into their operating structures, a process that is expected to take time and management bandwidth. Analysts said this makes further inorganic expansion unlikely in the near term.
Within the Adani Group, the cement business has begun simplifying its corporate structure by folding multiple subsidiaries, including Orient Cement, ACC, Sanghi Industries and Penna Cement, into Ambuja Cements. Market participants expect this consolidation exercise to continue over the coming quarters before the group revisits acquisition-led growth. A similar phase of internal consolidation is anticipated at UltraTech, reinforcing expectations of a deal lull across the sector.
What do analysts say?
Beyond integration priorities, analysts pointed to structural constraints. While several small and mid-sized regional players remain, the pool of attractive acquisition targets has thinned. Many of the assets that offered scale, strong limestone security or strategic geographic positioning were absorbed during the previous consolidation cycle. What remains, experts said, often requires significant turnaround effort or offers limited market share gains for the largest producers.
Cost dynamics could still influence consolidation over the medium term. While pet coke prices and other input costs have moderated since November, a renewed rise in energy or logistics costs, combined with macroeconomic pressures, could prompt smaller players to seek exits, potentially reopening the consolidation window.
As deal activity cools, attention has shifted back to pricing and operating fundamentals, where views remain mixed. Some analysts remain cautious on the prospects of a meaningful pricing recovery, pointing to an aggressive capacity addition pipeline. According to analysts at CareEdge Ratings, sustained pricing power is unlikely until capacity utilisation consistently exceeds 70–75%, a threshold that appears difficult to achieve in the near term given ongoing expansions.
Others argue that while a sharp upswing in prices is unlikely, the worst of the correction is over. With costs normalising and demand improving, cement prices are expected to remain broadly stable across most regions, supported by better realisations seen in recent quarters.
Demand visibility remains relatively strong. Housing and infrastructure continue to anchor consumption, while private capital expenditure and industrial activity are expected to provide incremental support. Icra expects cement volumes to grow 6.5–7.5% to 482–486 million tonnes in FY26, followed by 6–7% growth in FY27, citing steady demand from end-use sectors. The agency noted that volumes rose 8.5% year-on-year in the first eight months of FY26, aided by sustained construction activity and a post-monsoon pickup.
Government infrastructure spending and the recent GST rate cut on cement are also expected to support demand momentum through FY27, even as housing continues to account for the bulk of consumption.
On the supply side, capacity additions are accelerating, largely driven by large players expanding organically and sweating assets acquired earlier. CareEdge estimates that cumulative capacity additions between FY26 and FY28 could exceed 180–200 million tonnes. Despite this, Icra expects industry-wide capacity utilisation to remain broadly stable at around 70–71% on an expanded base, reflecting a gradual but steady absorption of new capacity.