Crisil, Real Estate News, ET RealEstate
NEW DELHI: The cement sector is expected to see a 6.5-7.5% demand growth in the financial year 2025-26, according to Crisil Ratings
The demand is expected to be driven by a 10% 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.
In FY25, cement demand growth was moderate at 4.5-5.5% owing to a sluggish start to the year because of the general elections, spatially well-distributed monsoon that impacted construction along with high base of past three fiscals.
Weak state government spending in the first half also slowed pace of project execution and a slow real estate market impacted urban housing.
Sehul Bhatt, director, Crisil Intelligence said, “Budgets of 12 states, accounting for 63-65% of Indian cement demand, reveal a substantial 11% increase in total allocations for the current fiscal. The enhanced investment is expected to stimulate cement demand, driving growth of 7.5-8.5% from the infrastructure sector.”
Rural housing will continue to dominate cement consumption, with an estimated share of 32-34%, as a healthy monsoon season is expected to boost agricultural income, which will create housing demand.
The pace of execution is expected to pick up under the Pradhan Mantri Awas Yojana – Gramin, with a rise in sanctions and more under-construction units.
The urban housing segment, which faced headwinds in fiscal 2025 due to sluggish real estate, is expected to regain momentum in the current fiscal, owing to a low base, interest rate cuts and improved execution pace under Pradhan Mantri Awas Yojana – Urban.
Sachidanand Choubey, associate director, Crisil Intelligence said, “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.”
The industrial and commercial segment, which accounts for 13-15% of the domestic cement demand, is expected to see a steady growth this fiscal, driven by traction from commercial real estate and warehousing.
Following three years of strong growth, the segment had slowed down in fiscal 2025 owing to moderation in private capex growth.
