Cement Prices Likely To Rise 2-4 Per Cent In FY26, Infrastructure To Drive Demand, Says CRISIL

CRISIL said that it expects demand for cement to grow from 6.5-7.5 per cent in FY26, driven by a rise in budgetary allocation for core infrastructure, rural housing projects and above-normal monsoon

The cement industry is facing low realisation in some key markets, due to falling prices on account of heightened competitive intensity and moderation in demand in the sector.

Source : Freepik

Cement prices are expected to rise 2-4 per cent in the ongoing fiscal year, helping companies increase their sales realisation, according to a report from rating agency and analytical firm Crisil.

Besides, it also expects demand for cement to grow from 6.5 to 7.5 per cent in the current fiscal year, driven by increase in budgetary allocation for core infrastructure, rural housing projects and above-normal monsoon.

"The cement sector is expected to see a 6.5-7.5 per cent demand growth this fiscal driven by a 10 per cent rise in budgetary allocation for core infrastructure ministries and on expectation that an above-normal monsoon will boost agricultural profitability, in turn lifting rural housing demand," it said.

In FY25, the cement industry had a moderate demand growth of 4.5-5.5 per cent owing to a sluggish start to the year because of the general elections, well-distributed monsoon that impacted construction, along with high base of the past three fiscal years.

The cement industry is facing low realisation in some key markets, due to falling prices on account of heightened competitive intensity and moderation in demand in the sector.

"A demand surge is anticipated across segments, driven by increased capex allocations for infrastructure and housing ministries. This uptick is expected to support a price rise in fiscal 2026, following a two-year lull. Although competition for market share remains fierce, we estimate a modest 2-4 per cent price increase as companies focus on improving realisations," said Crisil Intelligence Associate Director Sachidanand Choubey.

The report further said infrastructure, which accounts for almost one-third of the domestic cement demand, is expected to remain a key demand driver in the current fiscal year, too. Within infrastructure, roads have been the largest contributor, followed by railways, irrigation, and urban infrastructure.

Budgets of 12 states, accounting for 63-65 per cent of Indian cement demand, reveal a substantial 11 per cent increase in total allocations for the current fiscal year.

Rural housing will continue to dominate cement consumption, with an estimated share of 32-34 per cent, as a heathy monsoon season is expected to boost agricultural income, which will create housing demand.

In addition, schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY) and MNREGA targeted towards rural segment will also support consumption due to higher budgetary allocation.

The urban housing segment, which faced headwinds in FY25 due to sluggish real estate, is expected to regain momentum in FY26, owing to a low base, interest rate cuts and improved pace of execution under Pradhan Mantri Awas Yojana -- Urban. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)