Cement Industry Optimistic About Growth in 2025 Amid Challenges

Indian Cement Industry is confident of a recovery in 2025 after a year of consolidation and tough times. Industry leaders are announcing an 8% growth in sales based on increased demand expected from government infrastructure projects and increased housing activity.

In 2024, the industry experienced several challenges, including moderate capacity utilization levels, lower sales realization, and slowing volume growth, all of which conspired to dip revenues. But the two big dominant players in this sector, UltraTech Cement and Adani Cement have expanded their footprints by pulling off some significant acquisitions this year.

The UltraTech which belongs to the Aditya Birla Group, together with Adani-led Ambuja Cements, expanded their capacity by almost 50 million tons per annum at an investment of USD4.5 billion. The acquisition of some companies like Sanghi and Penna Cements by the Adani group will ramp up Adani Cement’s capacity to a whopping 100 MTPA, with a vision to achieve 140 MTPA by FY28.

This expansion brings Adani close to UltraTech’s current capacity of 156.66 MTPA.

The industry has also seen a structural shift, with the top five cement producers now commanding 60-65% of the total capacity, according to Deloitte India. However, growth slowed in 2024, with cement volumes growing by just 4.5-5.5%, down from previous years when the sector saw stronger gains.

Cement production capacity in India has reached a total of 690 metric tons, and the sector will revive due to significant government spending on housing and infrastructure. Cement demand is likely to increase by about 7-8% in the medium term, aided further by rural consumption, urban housing development, and public infrastructural projects.

Overall, the cement sector is likely to witness a capacity addition of about 35 MTPA by the end of FY2025, mainly driven by a stronger economy and increasing demand. Yet, despite the growth prospect, capacity utilization is likely to remain moderate at about 70% in the coming years as the new capacity gains traction slowly.

Industry leaders, including Shree Cement’s Neeraj Akhoury, remain confident that improving price realizations and stronger government and private sector spending will fuel the sector’s growth into 2025.