New Delhi [India], February 23 : The outlook for the cement sector remains positive, supported by healthy demand trends, improving prices and higher capital expenditure allocation in the FY27 budget, which is expected to boost demand further, according to a report by Nuvama.
The report stated that cement demand and prices showed improvement in January 2025, indicating strengthening momentum in the sector.
This improvement came despite a sharp decline in capital expenditure by the central government and central public sector enterprises (CPSEs), which plunged around 25 per cent and 40 per cent year-on-year, respectively, in January 2026.
However, the report highlighted that state government capex remained supportive, expanding around 15 per cent year-on-year in December 2025.
For the period April-December 2025, both central and state government capex increased around 15 per cent year-on-year each, while CPSE capex declined marginally by around 2 per cent year-on-year.
The report also noted that real estate activity remained weak, with launches in volume terms falling around 9 per cent year-on-year in calendar year 2025, following a 7 per cent year-on-year decline in calendar year 2024.
Despite sluggish real estate launches, the overall cement demand outlook remains positive.
"We reckon demand shall be healthy in Q4FY26E. We are positive on the cement space given, improving absorption and realisation," the report stated.
The report further highlighted that the capital expenditure trajectory has remained strong in the year-to-date period of FY26, which has supported cement demand.
In addition, the higher capex allocation announced in the FY27 budget has raised expectations that cement demand in FY27 will be stronger than in FY26.
Improvement in cement prices is also expected to support the sector's performance. The report noted that cement prices started improving gradually from December 2025 onwards, after witnessing a correction during October-November 2025.
This positive price momentum is likely to continue through the fourth quarter of FY26.
In terms of overall growth, the report forecasts that industry volumes are expected to grow in mid-single digit year-on-year in FY26, supported by improving demand and pricing trends.
The report expressed a positive outlook for the cement sector, driven by improving absorption, better price realisation, a healthy demand outlook in the fourth quarter of FY26, and continued support from government capital expenditure, especially with higher allocation in the FY27 budget expected to further strengthen demand in the coming financial year.
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