Indian cement producers are projected to invest US$ 14.89 billion (Rs. 1.25 trillion) in capacity building between FY25 and FY27, driven by a strong demand outlook and a competitive push for market share, according to a CRISIL report released on Thursday. This capital expenditure (capex) outlay is expected to be 1.8 times higher than the capex during the past 3 fiscal years, while credit risk profiles of manufacturers are anticipated to remain stable due to their low capex intensity and robust balance sheets, with financial leverage sustaining below 1 times, supported by strong profitability.
CRISIL's analysis of 20 cement companies, representing over 80% of the industry’s installed cement grinding capacity as of March, indicates that over 80% of the projected capex through 2027 will likely be funded through operating cash flows, minimizing additional debt. Director at CRISIL Ratings, Mr. Ankit Kedia, highlighted that existing cash and liquid investments of over US$ 4.77 billion (Rs. 40,000 crore) would provide a cushion for implementation delays. The report also noted that a 10% annualized increase in cement demand over the past three fiscal years outpaced capacity additions, pushing utilization levels to a decadal high of 70% in FY24. Looking ahead, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings, Mr. Manish Gupta, expects the cement demand outlook to remain healthy, with a compound annual growth rate of 7% over FY25-29 and anticipates an addition of 130 million tonnes (MT) of cement grinding capacity, nearly a fourth of the existing capacity, during this period.
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