The rating agency - ICRA in its report has said that the cement industry is likely to grow by 7-8% in the fiscal year 2025-26 (FY26), supported by sustained demand from housing and infrastructure sectors. Further, the cement industry has recorded a 9.2% year-on-year increase in the volumes in FY26 up to February. It added that the cement industry witnessed healthy expansion in profits in the previous fiscal, following an 11-17% expansion in OPBIDTA/MT (operating profits per unit of sales volumes) to Rs 900-950 per MT (metric tonnes).

However, it said that the operating environment of the industry to moderate in FY27 due to cost pressures. It noted that the sector is likely to face pressure on operating profitability in H1 FY27 amid higher input costs, primarily fuel (petcoke and coal) and freight (diesel) amid ongoing geopolitical tensions in West Asia. Further, the OPBIDTA/MT for FY27 is expected to moderate by 6-11% to Rs 820-870. 

Moreover, it noted that rising costs may prompt some price increase, but the same is likely to remain limited to 2-4% in FY27 owing to constrained pricing flexibility. Further, it said that credit metrics of the cement industry to remain comfortable, despite the margin moderation and incremental debt requirements arising from ongoing capacity additions, as demand conditions are likely to remain robust.