India Ratings and Research has forecasted a mid-single-digit growth in the demand for cement in FY26, driven by the recovery of infrastructure demand, improvement in rural demand, and sustainable growth in urban housing. While the demand is expected to improve, the company notes that pricing will be key to profitability. India Ratings and Research maintains a neutral outlook for the cement industry as a whole, with a stable outlook for the rated cement portfolio. Despite the challenging pricing environment, the sector will be supported by range-bound input costs, stable balance sheets, and anticipated demand growth.
The research firm expects a weak pricing environment in FY26, with companies focusing on increasing volumes amid the influx of decadal-high capacities. Prices are likely to be more stable compared to the sharp fall in FY25, with realisations down around 7% year on year in 11MFY25 due to continued capacity additions amid weak demand.
India Ratings and Research has sounded a warning about small (tier 2) businesses, with a deteriorating outlook, although it maintains a stable outlook for its rated cement portfolio. Overall, the research firm believes that the cement sector will be well-served by range-bound input costs, stable balance sheets, and anticipated demand growth, making it a stable sector for investors. However, investors are advised to check with certified experts before making any investment decisions.