Cement Industry Set for 158 MT Capacity Expansion by FY28: Citi

India’s cement industry is entering another expansion cycle, with brokerage firm Citi highlighting a sharp acceleration in announced capacity additions over the next three years. According to the report, cement companies have outlined expansion plans of nearly 158 million tonnes between FY25 and FY28, translating into a capacity compound annual growth rate of about 7.4 percent.

A significant portion of this growth is being driven by industry leaders UltraTech Cement and Ambuja Cement, which together account for more than half of the planned additions. Clinker capacity is also set to expand by around 77 million tonnes during the same period, ensuring that incremental cement grinding capacity remains backed by adequate upstream integration.

Regionally, the North is expected to witness the fastest growth, with effective capacity CAGR projected at 11 percent. The East and Central markets may see growth of about 7 percent, while the South and West are likely to expand at a relatively moderate pace of around 5 percent. This uneven regional expansion could influence pricing dynamics, particularly in the North where supply growth may outpace demand in the near term.

Despite the upcoming supply wave, sector consolidation continues to strengthen. The top five players now control more than 75 percent market share in most regions, offering pricing discipline and operational efficiencies. Industry utilisation levels are estimated to hover around 67 to 68 percent in the coming fiscal years, reflecting stable but not overheated demand conditions.

While pricing growth has remained muted, profitability has improved due to cost efficiencies, logistics optimisation and better fuel management. Analysts believe that continued consolidation and disciplined capital allocation could support earnings resilience even as capacity ramps up.

Overall, the sector appears positioned for steady long term growth, supported by infrastructure spending, housing demand and industrial activity across India.