Cement Industry Thrives Despite Challenges, Faces Capacity Constraints
Cement firms do well amid strain, but face capacity test
Image: The Economic Times
Cement companies reported strong volume growth in the March 2026 quarter, driven by construction and government spending. However, rising costs are impacting margins, with demand growth expected to moderate in FY27. Companies are focusing on cost efficiency and capacity expansion to maintain profitability.
- 01Ultratech Cement and Shree Cement achieved double-digit revenue growth in the March quarter.
- 02JK Cement reported the strongest volume growth, while Dalmia Bharat lagged with low-single digit growth.
- 03Companies are implementing cost reduction strategies, with Ultratech targeting a ₹300 per tonne reduction by FY28.
- 04Ambuja Cement plans to increase capacity to 119 million tonnes per annum (MTPA) by FY27, up from 109 MTPA.
- 05The cement sector is facing margin pressures due to increased fuel and logistics costs.
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Cement firms have shown robust volume growth in the March 2026 quarter, primarily driven by heightened construction and real estate activities, alongside increased government spending. Despite this growth, rising fuel and input costs have pressured margins, leading to a decline in operating profit before depreciation and amortization (EBITDA) across the sector. Ultratech Cement and Shree Cement reported double-digit growth, while Ambuja Cement and JK Cement achieved high-single digit growth. Dalmia Bharat, however, lagged with low-single digit growth. Looking ahead to FY27, demand growth is anticipated to slow to mid-single digits, with aggressive capacity additions likely to keep utilization rates low, thereby limiting pricing power. Companies are focusing on cost efficiencies and premiumisation strategies to safeguard margins. Ultratech aims to expand its capacity to over 240 million tonnes per annum (MTPA) by FY28, while Ambuja Cement plans to increase its capacity to 119 MTPA. These expansions are supported by significant capital expenditure plans.
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The cement industry's performance directly affects construction costs and housing prices.
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