Cement Industry Poised for Strong Growth in H2 FY26 as Demand Rebounds: CRISIL

India’s cement industry is entering the second half of FY26 with renewed optimism as CRISIL projects an 8 to 9 percent rise in volumes, signalling a stronger recovery compared to the first half. The rating agency highlights that deferred demand, improved liquidity among builders and contractors and a stable pricing environment are expected to drive the sector’s momentum through the remainder of the fiscal year.

During the first half of FY26, the industry reported a moderate 5 percent year on year volume growth, recovering from a flat performance in the same period last year. CRISIL notes that the sector is now positioned for faster expansion as construction activity resumes across infrastructure, residential development and urban projects. The improved cash flow situation within the ecosystem is also likely to support higher off take in the coming months.

Profitability is projected to strengthen notably this year. CRISIL expects operating margins to expand by 250 to 300 basis points, aided by better realisations, premium product sales and relatively stable input costs. The reduction of GST from 28 percent to 18 percent is expected to keep price levels competitive, though steady demand and premiumisation will help companies maintain healthy realisation levels.

Cement prices across India are expected to remain within the range of ₹354 to ₹359 per 50 kg bag. When GST is excluded, prices may edge up by 3 to 4 percent in the coming quarter. Southern and eastern markets are expected to show modest price recovery after last year’s declines, supported by stronger demand visibility.

On the cost front, freight and power expenses, which make up more than half of total operating costs, are expected to soften. Limestone prices remain elevated, yet overall cost stability will help the industry achieve operating margins of 18 to 20 percent, compared to 16 percent last fiscal.

With improving market fundamentals and a more favourable demand environment, CRISIL’s outlook suggests a steady and resilient growth path for India’s cement sector in the second half of FY26.