New Delhi [India], August 23 (ANI): Rural and urban housing, infrastructure, and commercial projects are driving cement demand, expected to grow at a 7-8 per cent CAGR, or 1.0-1.2 times real GDP growth, over the medium term.

Capacity additions in the Indian cement sector are likely to pick up across regions starting in the last quarter of the Financial Year (FY) 2025, according to a report by UBS.

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Region-wise, demand in the eastern market fell sharply due to early rains, though prices remained steady at Rs 353 per bag. In the southern region, prices increased by Rs 10 per bag despite the monsoon.

The report noted that prices will improve in FY26 and FY27, after falling sharply in FY25.

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In the medium to long term, the report added that the prices will remain strong due to fewer players in the industry (consolidation).

The report added, "We remain constructive on demand and expect volume to grow 1.0-1.2x the rate of growth in real GDP over the medium term. We see margin tailwinds and expect costs to keep coming down in the next two to three years."

"We expect cement prices to rebound after a sharp fall in FY25, although pricehikes could be modest, considering strong capacity additions in FY26-27. We remain positive on the long-term outlook for margins and return ratios, given the sector's strong consolidation trend," the report further stated.

In August of the current year, cement prices remained flat compared to the previous month but were stronger on a year-on-year basis.

The monsoon season slowed down construction activity, particularly in rural areas and infrastructure projects, leading to weaker offtake and limiting companies' ability to raise or sustain prices.

According to the data released by the Ministry of Commerce & Industry on August 20, the cement production (weight: 5.37 per cent) increased by 11.7 per cent in July, 2025 over the same period of the last year. Its cumulative index increased by 8.9 per cent during April to July, 2025-26 over the corresponding period of the previous year. (ANI)

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