Indian Cement Sector: Comprehensive Analysis Of Q2 Fy26 & H1 Fy26 Performance And Outlook

Summary: The Indian Cement Sector is currently navigating a dynamic landscape characterized by robust demand drivers, aggressive capacity expansion, and a strong focus on cost optimization and sustainability. While Q2 FY26 experienced some seasonal headwinds due to extended monsoons and festive periods, the overall outlook for H2 FY26 and beyond remains highly optimistic, driven by significant government infrastructure spending, a rebound in housing demand, and favorable policy reforms like the GST rate reduction. Major players like UltraTech, Ambuja/ACC, Shree Cement, and Dalmia Bharat are aggressively expanding capacity, enhancing operational efficiencies through green energy adoption and logistics improvements, and strategically consolidating market share. Profitability metrics, particularly EBITDA per ton, showed strong year-on-year growth for most players, albeit with some quarter-on-quarter moderation due to seasonal volume dips and higher operating costs for some. The sector is poised for sustained growth, with an increasing emphasis on premium products, digital transformation, and achieving ambitious net-zero targets.

A. Industry Overview & Market Landscape

The Indian cement sector, a cornerstone of the nation's infrastructure and housing development, is experiencing a period of significant transformation and growth. India's per capita cement consumption, currently around 300 kg, remains substantially below the world average of 540 kg, indicating a vast untapped potential for growth. This gap underscores the long-term structural demand drivers for the industry.

Total Addressable Market Size and Growth Rates: The overall cement industry demonstrated resilience in Q2 FY26, with an estimated growth of approximately 3-5% (UltraTech, Shree Cement) or ~4% (Ambuja/ACC, Dalmia Bharat, CRISIL estimate). This was primarily due to early and extended monsoons, weak rural demand, and demand deferment ahead of GST rate reduction. However, the industry is projected to achieve a higher growth rate of 6-7% for the full year FY26 (UltraTech) and is expected to expand by 7-8% during FY26 (Ambuja/ACC, Dalmia Bharat). Looking further ahead, Indian cement demand is anticipated to grow at a Compound Annual Growth Rate (CAGR) of 7-8% during this decade (Dalmia Bharat), reflecting strong underlying economic fundamentals and government thrust on infrastructure.

Market Structure and Segmentation: The market is primarily segmented by product (grey cement, white cement, ready-mix concrete, value-added products), geography (North, South, East, West, Central regions), and customer type (retail/trade, institutional/B2B).

• Product Segmentation:
  • Grey Cement: The dominant product, with companies like UltraTech, Ambuja/ACC, Shree Cement, Dalmia Bharat, J.K. Cement, Nuvoco, JK Lakshmi, Star Cement, and Sagar Cements all having significant grey cement capacities.
  • White Cement & Value-Added Products: J.K. Cement has a strong presence in white cement (WhitemaxX) and value-added products like wall putty, gypsum plaster, tile adhesives, grouts, and paints (JKMEXX Coloursofje). UltraTech also focuses on premium product mix (37.4% in Q2 FY26). Ambuja/ACC's premium products constitute 35% of trade sales, with volumes up 28% YoY. Shree Cement's premium product share increased from 15% to 21%. Nuvoco achieved an all-time high premiumization of 44% in Q2 FY26. JK Lakshmi's premium product share in trade sales was 26%. Star Cement's premium sales were 13.1% of trade sales. This indicates a strong industry-wide trend towards premiumization, driven by evolving customer preferences and potentially aided by GST reforms.
  • Ready-Mix Concrete (RMC): A growing segment, with UltraTech operating 408 RMC plants in 161 cities, contributing ~4% to its cement volumes, and achieving a 30% ROCE. Ambuja/ACC operates 116 RMC plants in 45 cities, with RMC volume up 49% YoY in Q2 FY26. Shree Cement has 24 operational RMC plants and aims for 40 by FY26. Nuvoco also has 58 RMC plants. This segment offers higher value addition and direct engagement with large construction projects.
• Geographic Distribution and Regional Dynamics:
  • North & West: UltraTech is focusing its next phase of growth (18 MT out of 22.8 MT) in the Northern markets and 4.8 MT in Western markets, indicating strong demand potential. UltraTech notes no oversupply risk in the North. Shree Cement also considers North a focus area for growth and expects North and West to perform slightly better than other regions in terms of demand. Star Cement is planning a significant entry into North India with 4-5 Mn tons grinding capacity.
  • South: UltraTech's regional capacity utilization in the South was in the 70s. India Cements is primarily a Southern player. Sagar Cements has high dependence on the South, which is currently expe