 "Cement sector operating profit to rise 12-18% in FY26, says Icra")
Cement companies’ operating profit for the fiscal year 2026 (FY26) is estimated to grow by 12–18 per cent to Rs 900–950 per metric tonne (MT) on the back of healthy demand, improved realisation and range-bound input costs, according to ratings agency Icra.
Operating profit before interest, depreciation, tax and amortisation (OPBIDTA) of cement firms stood at Rs 806 per MT in FY25. The OPBIDTA per MT had declined by 16 per cent year-on-year (Y-o-Y) due to weak realisations, especially during the first half of FY25, because of the extended monsoon and the impact on government capital expenditure amid the general elections.
Icra’s sample includes ACC, Ambuja Cements, JK Cements, JK Lakshmi Cement, The Ramco Cements, UltraTech Cement, Dalmia Bharat, Birla Corporation, Shree Cement, Sagar Cements and Heidelberg Cement India, which cumulatively account for 74 per cent of industry capacity.
The GST cut on cement is expected to reduce overall construction expenses in rural housing by 0.8–1.0 per cent, boosting volumes and supporting enhanced capacity addition. Backed by healthy cement demand, average cement realisation is expected to rise by 3–5 per cent in FY26.
Cement volumes increased by 8.5 per cent in the first five months of FY26 due to strong demand from the housing and infrastructure segments, despite the early onset of the monsoons in a few regions. During the same period, cement prices increased by 7.4 per cent Y-o-Y, with major hikes in the northern and eastern regions. The trajectory of input prices, especially for pet coke and freight, is linked to global crude, which remains exposed to geopolitical dynamics.
Anupama Reddy, vice-president and co-group head, corporate ratings, Icra, said, “With the recent GST rate cut from 28 per cent to 18 per cent expected to be passed on to customers, and the average retail price of cement currently ranging between Rs 350–360 per bag, consumers are projected to benefit by Rs 26–28 per bag. Driven by healthy demand, capacity additions may increase to 41–43 million metric tonnes per annum (MMTPA) in FY26 from 31 MMTPA in FY25, spearheaded by the eastern region, which is likely to lead the grinding capacity.”