Synopsis
India’s cement sector faces a subdued start to FY27, with extended heat and water scarcity dampening construction despite a delayed monsoon. Analysts anticipate a significant slowdown in demand growth, with volumes projected at 4-5% compared to last year’s 7-8%. Margins are also under pressure from rising costs, with a recovery expected in the latter half of the fiscal year.
ETMarkets.com India’s cement industry is bracing for a softer-than-expected first quarter of FY27, with extended summer heat and water scarcity disrupting construction activity despite a delayed monsoon, according to Jyoti Gupta, Senior Research Analyst at Ashika Institutional Equities.
Demand growth slows sharply Speaking to ET Now, Gupta clarified that while a delayed monsoon should have theoretically extended the construction window, the reality played out differently. Severe water scarcity caused by extended heat actually disrupted what could have been a construction boom in the first quarter. As a result, demand that peaked in the fourth quarter of FY26 is expected to dip on a quarter-on-quarter basis.
Gupta projects industry volume growth of just 4% to 5% for the quarter, a notable slowdown compared to the 7% to 8% growth seen in the same period last year. She attributed the slump to a combination of factors: reduced working hours due to extreme heat, scarcity of water needed for construction, and ongoing concerns around cement bag availability, all of which collectively suppressed demand-led construction activity.
Margins under pressure, leadership holds steady
Despite the demand softness, Gupta expects sector leadership to remain concentrated among the established large-cap players, including UltraTech, Ambuja, Shree Cement, and JK Cement, even as pan-India demand struggles broadly.
On profitability, Gupta painted a cautious picture. She noted that elevated bag costs continue to weigh on margins, with some relief possible only in the second quarter. The full impact of power and fuel cost pressures is also expected to surface more prominently in Q2 FY27 rather than the current quarter. Having recorded EBITDA per tonne of just under ₹900 in Q4 FY26, Gupta forecasts a further sequential decline in Q1, translating to an estimated year-on-year drop of 25% to 30% in industry-wide EBITDA per tonne.
No price hikes in sight as monsoon sets in
On pricing, Gupta said the industry closed FY26 with realisations of approximately ₹4,500 per tonne, but the past three months have shown a slight decline rather than improvement. With mon
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