Aided by strong demand and urge to gain market share, cement companies are expected to invest ₹1.25 lakh crore during FY25-27.

A total of 130 million tonne or nearly a fourth of the existing cement grinding capacity will be added in the next three fiscals.

Crisil Ratings said a healthy 10 per cent annualised increase in cement demand in the past three fiscals outpaced growth in capacity addition, pushing utilisation level to a decadal high of 70 per cent in FY24 and prompting manufacturers to press the capex pedal.

The projected outlay will be 1.8 times the capex during the past three fiscals, yet the credit risk profiles of manufacturers will remain stable, it said.

Crisil Ratings analysed 20 cement makers, accounting for over 80 per cent of the industry’s installed cement grinding capacity as on March 31, 2024.

Healthy demand outlook

Manish Gupta, Senior Director, Crisil Ratings, said cement demand outlook remains healthy with a compounded annual growth rate of 7 per cent over FY25-29.

The surge in capex over the next three fiscals will primarily cater to this growing demand and to the aspirations of the cement makers to improve their national presence.

Despite the huge capex, the credit profiles of Crisil Ratings-rated cement manufacturers will remain stable because capex intensity of the cement industry is still low and likely to remain range-bound at 0.7-0.9 time in the next three fiscals, owing to the sustenance of healthy operating profitability and ramp-up of newly commissioned facilities.

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