India's Cement Boom: Rs 1.2 Lakh Crore Capex Planned by FY28! Unmissable Growth Ahead?

Industrial Goods/Services

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Updated on 13 Nov 2025, 09:59 am

India's cement sector is on the cusp of significant growth, with plans for substantial capacity addition and capital expenditure leading up to FY28. According to a Crisil Ratings report, the industry is set to add 160-170 million tonnes of capacity between FY26 and FY28. This pace of growth is a remarkable 75% higher than what was observed in the previous three fiscal years.

Cement manufacturers are expected to undertake a total capital expenditure (capex) of around Rs 1.2 lakh crore during FY26-FY28. This massive investment is fueled by anticipated healthy incremental demand, projected at 30-40 million tonnes annually, primarily from the infrastructure and housing sectors. The sector has already seen a positive trend, with capacity utilization rising to 70% in the past fiscal, up from a decade's average of 65%.

Anand Kulkarni, Director at Crisil Ratings, noted that while the overall growth is strong, the commissioning of capacities might not be uniform, with a significant 70-75 MT expected this fiscal, potentially moderating near-term capacity utilization. A key strategic move highlighted in the report is that 65% of the new capacity will stem from brownfield projects, which involve expanding existing facilities. This approach offers financial leverage through shorter construction times, reduced land acquisition needs, and lower capital costs.

Furthermore, the report indicates that the projected capex intensity will remain manageable, ensuring limited reliance on external debt, with net debt to EBITDA expected around 1.1 times. About 10-15% of this capex will be directed towards green energy initiatives and enhancing cost efficiency.

Impact: This news is highly impactful for the Indian stock market as it signals strong growth prospects, significant investment, and potential for increased profitability for cement companies. Investors can anticipate potential stock price appreciation and sector-wide positive sentiment. Rating: 9/10.

Difficult Terms: Capital Expenditure (Capex): Money spent by a company to acquire, maintain, or upgrade its physical assets like buildings, machinery, and equipment. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operational profitability before accounting for financing, tax, and non-cash expenses. Capacity Utilisation: The extent to which a company's production capacity is being used. A higher utilization rate generally indicates better efficiency and demand. Brownfield Projects: Projects that involve the expansion or upgrading of existing facilities or sites, as opposed to Greenfield projects which start from scratch on a new site.