India’s cement sector plans Rs 1.25 trillion capex over next two years

Mumbai: India’s top cement makers are slated to undertake capital expenditure worth Rs 1.25 trillion over the next two financial years (2025-26 and 2026-27) to add 130 million tonne capacity. This significant capex plan is driven by healthy demand outlook and quest for higher market share. But this aggressive investment will not weaken their balance sheets and thus may not impact their credit profiles.

The projected outlay will be 1.8x of the capex during the past three fiscals, yet the credit risk profiles of manufacturers will remain stable, Crisil Ratings said in a note on Thursday.

The sector’s credit profile is stable because of their continued low capex intensity and solid balance sheets with financial leverage sustaining below 1x on the back of strong profitability.

Crisil Ratings’ analysis is based on 20 cement makers who account for over 80 percent of the industry’s installed grinding capacity as of March 2024, the rating agency said.