Icra's September forecast: cement operating profit to rise 12–18% in FY26
Resurfacing a September 2025 Icra forecast of sector operating profit of Rs 900–950 per tonne in FY26, versus Rs 806 per tonne in FY25. Housing demand and GST-related price support may aid volumes, even as 41–43 MMTPA of capacity is expected to be added.
The development
Icra forecasts cement-sector operating profit will rise 12–18 per cent to Rs 900–950 per metric tonne in FY26. It expects GST cuts and housing demand to support volumes, while capacity additions may reach 41–43 million metric tonnes per annum.
The numbers
- 12–18 per cent
- Rs 900–950 per metric tonne (MT)
- Rs 806 per MT
- 16 per cent
- FY25
- 74 per cent
- 0.8–1.0 per cent
- 3–5 per cent
- 8.5 per cent
- 7.4 per cent
- 28 per cent
- 18 per cent
- Rs 350–360 per bag
- Rs 26–28 per bag
- 41–43 million metric tonnes per annum (MMTPA)
- 31 MMTPA
- FY26
Why it matters to operators and investors
Improving sector profitability may strengthen the strategic case for scale-building acquisitions or regional capacity deals, particularly where consolidation can offset the competitive impact of substantial new supply.
What to watch next
- Monthly all-India and regional cement price movements, especially after the peak construction season begins.
- Capacity commissioning pace versus demand growth and resulting utilization rates.
- Housing launches, rural demand indicators and central/state infrastructure tender execution.
- Petcoke, thermal coal, diesel and freight-rate movements.
- GST policy developments affecting cement pricing, input credits or construction demand.
- Regional competitive behavior by major producers and evidence of discounting in high-capacity markets.
- Monsoon timing and intensity, which can disrupt construction activity and dispatch volumes.
- Major cement producers are likely to prioritize price increases, premium-product mix and cost-efficiency programs rather than pursue broad volume-led discounting.
- Large companies may accelerate acquisitions, grinding-unit expansion and logistics investments to defend regional share and lower delivered cost.
- Dealers and contractors may advance purchases if successive price hikes appear sustainable, temporarily supporting dispatches.
- Smaller, highly leveraged producers could face margin pressure and become more likely acquisition targets if capacity utilization weakens.
- Higher sector cash generation may support deleveraging, capex funding and selective shareholder returns, though expansion spending will remain elevated.
The counter-case
The forecast assumes demand and pricing hold up despite a large 41–43 MMTPA capacity addition, which could intensify regional oversupply and trigger price competition. Higher operating profit per tonne may also be vulnerable to fuel, freight and petcoke cost inflation, while weaker infrastructure spending, a delayed housing cycle or uneven monsoons could limit volume growth.