Cement industry to grow 6-7 per cent in volume for FY27E: Nuvama
New Delhi, June 4
The Indian cement industry is projected to achieve a volume growth of 6-7 per cent for FY27E, driven by a significant ramp-up in infrastructure spending in the latter half of the fiscal year, despite facing immediate domestic and global disruptions.
"FY27E volume growth for the industry is likely to be 6-7%. Geopolitical issues, trajectory of infra capex and rising costs are likely to determine stock prices in the near term," according to a Nuvama institutional equities report.
The report noted that near-term growth is experiencing a temporary deceleration due to geopolitical factors and domestic operational challenges.
"We believe the overall cement pack is likely to report mid-single-digit volume growth in Q1FY27 due to impact of the Iran war, labour shortage in key regions and unfavourable weather," the report stated.
The industry is positioning its growth recovery on the back of enhanced capital allocations from the government, which are expected to stimulate construction activity later in the financial year.
"We forecast demand shall be healthy in H2FY27E with total infra capex in the recent Union Budget up 12 per cent over FY26 revised estimate (RE) and 10 per cent compared with FY26 budgeted estimate (BE)," the report added.
The sector enters the current fiscal year on the heels of a robust preceding quarter. In Q4FY26, the market witnessed healthy demand with 16 major cement companies reporting volume growth of approximately 6 per cent year-on-year and 16 per cent quarter-on-quarter.
While demand remained strong during January and February 2026, it slowed down in March 2026, primarily due to global cues. The report mentioned that realisation during the fourth quarter rose 2 per cent quarter-on-quarter, supported by regional price increases of around Rs 15 per bag following a steep correction in Q3FY26.
Simultaneously, manufacturing costs showed mixed trends during the final quarter of the previous fiscal. Power and fuel costs per tonne declined about 5 per cent quarter-on-quarter and 1 per cent year-on-year, while freight expenses per tonne rose 3 per cent quarter-on-quarter. Consequently, EBITDA per tonne declined 3 per cent year-on-year but grew 19 per cent quarter-on-quarter to Rs 1,033.
The industry is currently navigating rising input pressures alongside localized seasonal slow periods, though field data indicates early signs of recovery.
"With pet coke prices rising, the impact on power and fuel costs shall be seen in the latter part of Q1FY27; however, various cost savings initiatives by players would help in keeping costs under control," the report stated.
To counter these escalating input liabilities, manufacturing companies initiated price corrections at the start of the current financial year.
The report mentioned that while there is a sluggish demand in early Q1FY27, green shoots were visible in late May 2026, maintaining the expectation that demand will improve in the second half of FY27.
— ANI
Reader Comments
As someone in the real estate sector, this makes me optimistic. But I wonder if the growth is just a short-term blip due to the elections next year. Also, the report mentions "geopolitical issues" but doesn't clarify if the Iran war impact is directly on raw materials or just sentiment. India needs to diversify its fuel sources.
Good analysis from Nuvama. But the real question is whether this growth will actually benefit the common man or just boost stock prices. Cement prices already crossed ₹400 per bag in my area. That's a steep rise! 😤 The government should regulate prices if infra spending is increasing.
I'm skeptical about the H2 recovery. Every year we hear "demand will pick up in second half" but then delays in land acquisition and environmental clearances happen. The infra budget might be up 12% but implementation is the key. #GroundReality
Interesting data. From a global perspective, India's 6-7% growth is impressive compared to flat or negative growth in developed markets. But I worry about the war impact on fuel costs. The report mentions pet coke prices rising—that's a red flag for margins. Let's see if green shoots in May actually materialize.
As an NRI following Indian markets, the infra story is compelling. But the report seems a bit optimistic. Labour shortages and weather issues in Q1FY27 are real concerns. Also, if global recession deepens, export markets for cement substitutes might take a hit. Still, 6-7% is healthy for a cyclical industry.
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