Cement Sector Set for Strong Q3 Growth on Infrastructure and Rural Demand

India’s cement sector is poised for a solid performance in the third quarter of FY25-26, backed by sustained demand momentum and higher infrastructure activity. According to a recent report by Axis Direct, cement manufacturers under its coverage are expected to report year-on-year revenue growth, driven primarily by robust volume expansion rather than price increases.

The brokerage estimates cement demand growth of around 11 percent year-on-year during the quarter. This uptick is largely attributed to continued government-led infrastructure spending, which remains a key pillar supporting cement consumption across highways, urban infrastructure, and public works. Affordable housing demand has also stayed resilient, providing additional support to overall volumes.

A notable highlight of the report is the improving outlook for rural markets. Axis Direct expects rural demand to outperform urban consumption during the quarter, supported by above-normal monsoon conditions and relatively stable wage growth. These factors are helping boost construction activity in villages and semi-urban regions, translating into higher cement offtake. Infrastructure investment, particularly in roads and irrigation, is expected to act as a stabilising force for overall demand.

While pricing conditions are likely to remain competitive due to incremental capacity additions and intense competition among producers, the report suggests that strong volume growth should help cushion margins. Cement manufacturers are increasingly focusing on optimising logistics, improving operational efficiencies, and managing costs to protect profitability in a challenging pricing environment.

Looking beyond the quarter, Axis Direct projects cement demand growth of 7 to 8 percent for the full FY25-26. This outlook reflects the government’s continued push on capital expenditure, with infrastructure spending expected to remain elevated. The brokerage also noted that non-trade demand picked up during the quarter, aided by improved affordability following a reduction in Goods and Services Tax rates, particularly benefiting price-sensitive segments.

Overall, the report paints a constructive picture for the cement industry. While near-term challenges such as surplus capacity and competitive pricing persist, steady demand from infrastructure, housing, and rural markets is expected to support volume-led growth. For cement producers, the focus in the coming quarters will remain on scale, efficiency, and market reach as they navigate a dynamic demand environment.