Cement demand FY26: Real estate push, PMAY likely to sustain cement demand growth – Report

Strong real estate activity backed by government housing schemes such as the Pradhan Mantri Awas Yojana (PMAY) is expected to keep cement demand buoyant in FY26, said a report by Axis Securities. The report projects a 7-8 per cent growth in cement demand this fiscal, underpinned by increased infrastructure development and continued construction activity.According to news agency ANI, large-scale construction efforts under various government programmes are expected to fuel sustained demand for building materials, particularly cement, which plays a vital role in housing and infrastructure. “The projected growth in the real estate market, coupled with the government’s major housing initiatives such as PMAY, is expected to sustain the momentum in cement demand,” the report stated.After a slow start in Q1FY25 with just 2-3 per cent year-on-year growth, the cement sector rebounded strongly in the latter half of the fiscal year. Demand picked up in Q3 and Q4FY25, registering high single-digit growth, and this positive momentum is likely to continue into Q1FY26, driven by higher government capital expenditure and a seasonal uptick in real estate activity.Core sector data from the central government supports this trend, showing an 8 per cent year-on-year increase in cement output during April-May 2025. Historically, Q4 and Q1 are peak periods for cement consumption due to favourable weather and accelerated construction efforts.Earlier, India’s cement industry saw a 9 per cent growth in volumes in May 2025, reaching 39.6 million metric tonnes (MT). Cement dispatches in April and May combined rose 8 per cent year-on-year to 78.7 million MT. ICRA expects full-year volumes to reach 480–485 million MT in FY26, compared to 453 million MT in FY25.Average cement prices rose 8 per cent year-on-year to Rs 360 per 50-kg bag in May, after a 7 per cent price drop last fiscal. This price recovery, combined with a favourable cost environment, is likely to boost profitability. ICRA estimates operating margins for cement firms could rise by 80–150 basis points to 16.3–17.0 per cent in FY26.Cost pressures have also eased. Coal prices in June dropped 19 per cent year-on-year to $100/MT, while petcoke fell 2 per cent to Rs 10,880/MT. Diesel prices have remained steady at Rs 88/litre.While intense competition may limit pricing power, Axis Securities believes cement manufacturers will benefit from strong volume growth, driven by real estate and infrastructure momentum.