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Cement Sector Outlook Positive on Strong Demand, Higher FY27 Capex: Nuvama

The outlook for India's cement sector remains positive, supported by healthy demand trends and improving prices. A Nuvama report notes that demand and prices showed improvement in January 2025, indicating strengthening momentum. While central government and CPSE capex saw sharp declines, state government spending remained supportive. The higher capital expenditure allocation in the FY27 budget is expected to further boost cement demand in the coming financial year.

Key Points: Cement Sector Outlook Positive on Demand & FY27 Budget Capex

  • Demand & prices improved in Jan 2025
  • State govt capex rose 15% YoY in Dec 2025
  • Higher FY27 budget capex to boost demand
  • Prices recovering from Dec 2025 after correction
  • Industry volumes seen in mid-single digit growth for FY26
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Cement sector outlook positive on healthy demand and higher capex in FY27 budget: Nuvama

Nuvama report highlights positive cement sector outlook driven by healthy demand, improving prices, and higher capital expenditure in the FY27 budget.

"We reckon demand shall be healthy in Q4FY26E. We are positive on the cement space given, improving absorption and realisation, - Nuvama report"

New Delhi, February 23

The outlook for the cement sector remains positive, supported by healthy demand trends, improving prices and higher capital expenditure allocation in the FY27 budget, which is expected to boost demand further, according to a report by Nuvama.

The report stated that cement demand and prices showed improvement in January 2025, indicating strengthening momentum in the sector.

This improvement came despite a sharp decline in capital expenditure by the central government and central public sector enterprises (CPSEs), which plunged around 25 per cent and 40 per cent year-on-year, respectively, in January 2026.

However, the report highlighted that state government capex remained supportive, expanding around 15 per cent year-on-year in December 2025.

For the period April-December 2025, both central and state government capex increased around 15 per cent year-on-year each, while CPSE capex declined marginally by around 2 per cent year-on-year.

The report also noted that real estate activity remained weak, with launches in volume terms falling around 9 per cent year-on-year in calendar year 2025, following a 7 per cent year-on-year decline in calendar year 2024.

Despite sluggish real estate launches, the overall cement demand outlook remains positive.

"We reckon demand shall be healthy in Q4FY26E. We are positive on the cement space given, improving absorption and realisation," the report stated.

The report further highlighted that the capital expenditure trajectory has remained strong in the year-to-date period of FY26, which has supported cement demand.

In addition, the higher capex allocation announced in the FY27 budget has raised expectations that cement demand in FY27 will be stronger than in FY26.

Improvement in cement prices is also expected to support the sector's performance. The report noted that cement prices started improving gradually from December 2025 onwards, after witnessing a correction during October-November 2025.

This positive price momentum is likely to continue through the fourth quarter of FY26.

In terms of overall growth, the report forecasts that industry volumes are expected to grow in mid-single digit year-on-year in FY26, supported by improving demand and pricing trends.

The report expressed a positive outlook for the cement sector, driven by improving absorption, better price realisation, a healthy demand outlook in the fourth quarter of FY26, and continued support from government capital expenditure, especially with higher allocation in the FY27 budget expected to further strengthen demand in the coming financial year.

- ANI

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Reader Comments

P
Priyanka N
Positive outlook is one thing, but will the common person benefit? Cement prices go up, so does the cost of building a home. Real estate is already weak. Need a balance between corporate profits and affordable housing.
A
Aman W
Good analysis. The dip in central capex in Jan is concerning, but state governments picking up the slack is a positive sign of cooperative federalism at work. Long-term infra projects need consistent funding.
S
Sarah B
Interesting read. As someone watching the markets, cement stocks have been volatile. This report gives clarity. The pre-budget anticipation for FY27 seems to be building a solid floor for the sector. Time to review my portfolio.
V
Vikram M
Demand is there, but what about sustainability? Cement industry is a major polluter. Hope with this growth, there is equal push for greener technologies and use of alternative materials. Growth should be responsible.
K
Karthik V
Finally some good news for the sector! My brother works with a cement supplier in Tamil Nadu, and he said orders have been steady from highway projects. This report confirms the ground reality. 👍

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