India’s cement industry is poised for significant consolidation, with leading companies projected to increase their capacity share beyond 60% in the next two years, according to Dalmia Bharat leadership. Following a subdued 5% demand growth in FY25, impacted by elections and erratic weather, the sector is expected to rebound with 7-8% growth in FY26. Dalmia Bharat aims to expand its cement capacity from 49.5 million tonnes per annum (MTPA) to 75 MTPA by FY28, underpinned by a Rs 3,520 crore investment plan. Alongside capacity growth, improving pricing dynamics and cost-efficiency measures are anticipated to strengthen the industry’s financial outlook.
Cement Sector Consolidation Trends
Dalmia Bharat’s senior management highlighted that consolidation among India’s top cement manufacturers has intensified over recent years. The top four players’ combined capacity share surged from approximately 48% in FY22 to nearly 58% in FY25. This expansion is expected to continue robustly, with the market leaders projected to exceed a 60% capacity share within two years.
Notably, FY25 alone saw a transfer of 52 million tonnes of cement capacity through acquisitions and mergers, underscoring active consolidation activity. While the broader industry’s installed capacity has grown at a compound annual growth rate (CAGR) of 5-6% over the past two decades, supply is forecasted to accelerate to 7-8% CAGR in the near term.
Cement Demand and Growth Outlook
The cement sector witnessed a modest 5% demand increase in FY25, subdued by political events and erratic monsoon patterns. However, Dalmia Bharat’s leadership remains optimistic, projecting a strong rebound with demand growth climbing to 7-8% in FY26. This growth will be propelled by healthy demand across housing, infrastructure development, and private investment sectors.
The year ahead is also expected to benefit from improved pricing dynamics and concerted cost management efforts, contributing to stronger financial performance across the industry.
Capacity Expansion and Strategic Investments
Dalmia Bharat, India’s fourth-largest cement producer, plans a major capacity augmentation under its Phase II expansion. The company aims to increase capacity from 49.5 MTPA to 75 MTPA by FY28, with a longer-term goal of reaching 110-130 MTPA through both organic and inorganic growth.
The company has earmarked an investment of Rs 3,520 crore over the next two years to add 3 MTPA each in Pune and Belgaum. In FY25, Dalmia Bharat added 4.9 million tonnes of capacity via greenfield and brownfield projects while maintaining a conservative Net Debt/EBITDA ratio of 0.3x, reflecting disciplined financial management.
Pricing Dynamics and Revenue Performance
Despite volume growth of 2% year-on-year in FY25, Dalmia Bharat’s revenue declined by 4.8% to Rs 13,980 crore due to weakening cement prices. The sector experienced price softness throughout FY25, particularly across key operating regions.
However, the pricing trend is showing signs of reversal. According to ICRA data, average cement prices rose 3% year-on-year to Rs 350 per 50 kg bag in March 2025, following a 7% price decline in FY25 where prices averaged Rs 340 per bag, down from Rs 365 and Rs 375 in FY24 and FY23 respectively.
Cost Efficiency and Sustainability Initiatives
Dalmia Bharat ranks among the lowest-cost cement producers nationally and is intensifying efforts to further reduce costs by Rs 150-200 per tonne over the next two years. The company is implementing multiple initiatives including enhanced renewable energy usage, improved heat and power efficiency, and the digitalisation and optimisation of its supply chain.
These efficiency measures are expected to deliver tangible cost savings and operational benefits starting in the current fiscal year, supporting margins amidst evolving market conditions.
Conclusion
India’s cement sector is undergoing accelerated consolidation, driven by strategic expansions among industry leaders like Dalmia Bharat. With a positive outlook on demand growth, improving pricing, and disciplined capacity additions, the industry appears well-positioned for sustained growth and profitability in the coming years. Dalmia Bharat’s focused investment and cost-reduction strategies further strengthen its competitive positioning, exemplifying the sector’s transition towards larger, more efficient, and financially robust players.
This evolution promises to reshape the market landscape, with key players increasingly dominating capacity and shaping industry dynamics through innovation and scale.
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