Downside Risks
Cement volume growth to moderate to 6-7% in FY27 vs 8.6% in FY26, says ICRA
This story was originally published at 21:18 IST on 30 June 2026
Register to read our real-time news.Informist, Tuesday, Jun. 30, 2026
NEW DELHI – The domestic cement volume is expected to grow 6-7% in the financial year 2026-27 (Apr-Mar) due to the downside risks of the softer estimated growth in gross domestic product, ratings agency ICRA Ltd. said in a report Tuesday. For April and May, the cement volume increased by 8.3% on year to approximately 85 million tonnes. The cement volume had risen 8.6% on year in FY26, driven by demand in the housing and infrastructure sectors.
The operating margins are expected to moderate by around 150-250 basis points in FY27, due to higher input costs, the ratings agency said. Additionally, downside risk remains, given volatility in crude-linked petcoke and freight costs amid ongoing geopolitical developments in West Asia, according to ICRA.
The domestic cement industry is expected to add 30-34 million tonnes per annum in capacity for the current financial year, while the capacity utilisation is expected to remain at 70-71%, the ratings agency said. The eastern and southern regions are likely to lead the grinding capacity expansion with the addition of 39-44 million tonnes per annum capacity over FY27-FY28, it added. The domestic cement capacity increased by 43 million tonnes per annum in FY26.
The net sales realisations grew by 7% on year in FY26. The ratings agency expects an on-year increase of 3-5% in the net sales realisations in FY27. Fuel and freight costs, which are linked to global crude oil prices, have been trending upward and could further increase in FY2027 due to volatility depending on geopolitical developments in West Asia, potentially exerting pressure on the sector's cost structure in FY27, ICRA said.
The ratings agency estimates operating income for its prominent industry players to grow by 9-12% in FY27, supported by volume expansion and a moderate uptick in cement prices. It expects the operating profit before interest, tax, depreciation, and amortisation per metric tonne to decline 8-14% to INR 820-870 per metric tonne in FY27. For the June quarter, the ratings agency has projected OPBITDA per metric tonne to moderate due to an increase in input prices – majorly fuel (petcoke and coal), selling (packaging) costs and freight (diesel) costs depending on geopolitical developments in West Asia. The OPBITDA per metric tonne rose 16% to INR 950 in FY26, the ratings agency said.
ICRA estimates the leverage at 1.45-1.55x and debt coverage metrics at 3.2-3.4x. End
Reported by Astha Oriel
Edited by Deepshikha Bhardwaj
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2026. All rights reserved.
To read more please subscribe
Share this Story:
