Record cement capacity additions may keep utilisation at 70-71% despite demand growth in FY27: Equirus Securities
"Capacity utilisation is expected to remain stable at around 70–71% in FY27, with higher utilisation in northern and central regions and relatively moderate levels in the south due to capacity overhang," the report noted.
According to the analysis, industry capacity additions are projected at 42-44 MTPA in FY27, following 50-55 MTPA in FY26, While the cement industry is estimated to have grown around 6.5-7.5 per cent in FY26 and demand is expected to grow around 5 per cent in FY27, the pace of capacity creation is expected to keep utilisation levels broadly stable across the sector.
The report noted that demand remained resilient during the year, driven by robust construction activity, especially post-monsoon in H2FY26, supported by sustained momentum across housing and infrastructure segments. The sector continues to benefit from rapid urbanisation, increasing housing demand and government-led investments in roads, metro rail projects, industrial corridors, ports and other infrastructure projects.
However, Equirus Securities highlighted that capacity creation remains one of the defining themes for the industry. Leading cement producers are continuing to expand through both organic and inorganic routes as they position themselves for long-term demand growth. According to the report, industry capacity additions are expected to remain substantial even after a year that witnessed an estimated 50-55 MTPA of fresh capacity creation.
Against this backdrop, utilisation is expected to remain under pressure despite rising demand. The report expects northern and central regions to continue reporting relatively stronger utilisation levels, while southern markets may continue to witness moderate utilisation due to capacity overhang.
The analysis suggests that the industry could increasingly move towards a phase where operational efficiency, utilisation improvement and return ratios become key differentiators. As fresh capacities come on stream across the sector, cement companies may focus on sweating existing assets and extracting efficiencies from recently commissioned facilities.
Ambuja Cements' strategy appears to reflect this evolving industry trend. According to the report, management is undertaking capacity expansion in a "calibrated manner", with focus consciously shifting towards stabilising newly commissioned capacities and improving utilisation across the existing base. The company further stated that additional capacity additions would be pursued more gradually once optimal utilisation is achieved.
The report noted that Ambuja Cements expanded its installed capacity to 109 MTPA by the end of FY26 through acquisitions and commissioning of new grinding and clinker capacities. The company plans to complete its ongoing 10.2 MTPA expansion programme in FY27, taking total installed capacity to 119 MTPA.
Equirus Securities said the company's strategic priorities are increasingly centred on operational harmonisation and extracting value from recently acquired assets. The analysis highlighted that management remains focused on strategic capital allocation and an unwavering focus on return on capital employed.
The report also noted that Ambuja has undertaken significant integration efforts across acquired businesses, including alignment of procurement, logistics, plant operations and commercial processes. These measures are expected to help realise synergies in freight optimisation, clinker movement and energy sourcing while strengthening market presence across regions.
According to the analysis, long-term growth prospects for the cement sector remain favourable. Rising infrastructure spending, affordable housing initiatives, manufacturing investments, Smart Cities projects and the National Infrastructure Pipeline are expected to continue supporting cement consumption in the coming years. India's per-capita cement consumption remains significantly below the global average, providing further room for long-term growth.
Nevertheless, with industry capacity additions expected to remain elevated over the near term, utilisation levels are likely to stay broadly stable despite continued growth in demand, making operational efficiency and asset productivity increasingly important across the sector.
Published on:
19 June 2026
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