Cement demand was relatively low during October and November 2025, with a year-on-year growth of approximately 6.5%, broadly aligning with the roughly 6% growth seen in the first half of the fiscal year. This slowdown resulted from various factors, including slow government capital expenditure, labor migration related to the Bihar elections, and limitations on construction activities—especially in the NCR—due to pollution-related restrictions.
Nonetheless, there are preliminary signs of improvement. Birla Corp informed CNBC-TV18 that while demand remained weak in October and November, positive indicators have started to surface in December. The market is steadily optimistic that demand could rise in the fourth quarter of the current fiscal (FY26), supported by increased government expenditure.
On the pricing front, results have been mixed. After showing stability between April and August 2025, average pan-India cement prices fell by around 2.5% in both October and November compared to levels in the second quarter. The decline was more significant in the non-trade segment, where prices dropped by about ₹15–20 per bag across different regions, whereas trade prices softened by around ₹5 per bag. A key concern for the sector is whether any substantial price increases can be absorbed only following Q4 FY26.
Structurally, consolidation within the cement industry appears mostly complete. The top five companies now represent about 62% of the industry’s capacity, up from 51% in 2020, with their share expected to reach nearly 65% by 2028. However, supply-side risks remain as newly acquired assets increase capacity. Projections indicate that capacity additions may grow at a CAGR of around 8%, outpacing the demand growth estimated at approximately 7%.
This discrepancy implies that utilization rates could remain below 70% for a prolonged period. As major players strive to capture market share, mid-cap and regional cement firms might experience intensified pressure on both prices and profitability.
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According to DAM Capital, larger cement manufacturers are well-positioned to navigate this landscape due to their diversified regional presence, capability to gain market share without significantly affecting margins, and stronger balance sheets to support capital expenditures. The brokerage anticipates that competitive pressure will remain high, favoring larger players in the medium term.
As 2026 draws near, cement stocks are poised for another year of keen observation. The trajectory of the emerging recovery in demand will depend on the speed of government spending, the sector’s ability to uphold pricing discipline, and how effectively new supply is managed.
