Dalmia Cement expects bounce back in growth to 7-8 per cent for cement sector in FY26
Sector consolidation in the cement industry by the big players is expected to continue as the leading companies are likely to enhance their capacity share to more than 60 per cent in the next two years, said the Dalmia Bharat leadership
New Delhi: Sector consolidation in the cement industry by the big players is expected to continue as the leading companies are likely to enhance their capacity share to more than 60 per cent in the next two years, said the Dalmia Bharat leadership.
Moreover, Dalmia Cement expects a bounce back in growth to 7-8 per cent for the cement sector in FY26, which witnessed a subdued cement demand growth of around 5 per cent last year amidst the general elections and erratic rains, according to the latest annual report of India’s fourth-largest cement manufacturer.
“We believe that the demand growth will bounce back to 7-8 per cent Y-o-Y in FY26, driven by healthy demand from all key drivers- housing, infrastructure building and private investments. The year is also expected to benefit with stronger pricing and a focus on cost savings,” said its Managing Director, Gautam Dalmia and Managing Director and CEO, Puneet Yadu Dalmia.
Over the pace of sectoral consolidation, they said it has increased during the last three years, and the capacity share of the top four companies has grown considerably from approximately 48 per cent in 2021-22 to nearly 58 per cent in 2024-25.
“Within this, in FY25 alone, we witnessed 52 million tonnes of capacity changing hands,” they said, addressing their shareholders. However, the overall installed cement capacity, over the last two decades, the industry has grown at a CAGR of 5-6 per cent.
“During the next couple of years, the supply is expected to grow at 7-8% CAGR, which could possibly keep the sector capacity utilisation at its current levels. Within this, the industry leaders will continue to expand at a faster pace, and are thus expected to enhance their capacity share to more than 60 per cent in the next two years,” they said.
The industry’s installed capacity is estimated to reach approximately 670 million tonnes (MT) by the end of FY25, supported by the commissioning of around 33-35 MT of new capacity during the year.
Dalmia Bharat, which achieved a cement capacity of 49.5 MTPA under Phase 1, has an ambition to increase it to 75 MTPA by FY28 and a long-term target of 110-130 MTPA in Phase II, which will be done through a mix of “organic and inorganic” capacity addition.
“Our Phase II expansion strategy will further reinforce our position as a pan-India pure-play cement player, placing us favourably on track to achieve our long term target of 110-130 MTPA,” they said adding “The journey ahead will be a mix of organic and inorganic capacity addition with more focus on planned and systematic organic growth.”
As part of Phase II expansion, Dalmia Bharat has announced plans to invest Rs 3,520 crore over the next two years and add 3 MTPA cement capacity each in Pune and Belgaum.
“In FY25, we added 4.9 MnT of cement capacity through a combination of greenfield and brownfield expansions, while maintaining a Net Debt/EBITDA ratio of 0.3x,” they said.
Moreover, the Indian cement sector was also facing lower sales realisation due to weakening prices, which had impacted the earnings of several listed companies.
However, according to Dalmias, the trend is reversing now. “We also witnessed considerable price weakness through the year in FY25, across our key operating regions, a trend which we now see reversing,” they said.
According to an ICRA report, in March 2025, the average cement prices grew by 3 per cent Y-o-Y to Rs 350 per 50 kg bag. In FY25, cement prices declined by 7 per cent Y-o-Y (year-on-year) to Rs 340 per bag. In FY2024, the average prices stood at Rs 365 per bag, over Rs 375 per bag in FY2023, said the ICRA report.
In FY25, despite a 2 per cent volume growth on a Y-o-Y basis, Dalmia Bharat’s overall revenue declined by 4.8 per cent to Rs 13,980 crore. Dalmia Cement is among the lowest total-cost cement producers in the country and plans to further reduce its costs over the next two years, they added.
“To further reduce our costs by Rs 150-200 per tonne over the next two years, we are implementing various strategies, including increasing the use of renewable energy, improving heat and power efficiency, and optimising and digitalising our supply chain. In the ongoing fiscal year, we will see many of these efficiency gains flowing in,” they said.
