Building Material Demand Subdued by Monsoon, 19% Rise in Government Capex Supports FY27 Recovery: Equirus
New Delhi, August 11, 2026: Widespread monsoon rains kept construction activity subdued in July, weighing on dealer offtake and cement procurement across the country, according to Equirus Capital’s Building Material Monthly Update for July 2026. Despite the seasonal slowdown, a 19 percent year-on-year rise in government capital expenditure by the Centre, states, and central public sector enterprises during April-May 2026 is expected to support the medium-term cement demand outlook and drive recovery from FY27, Equirus said in a press release.
Trade-level data showed that cement procurement remained largely need-based during July, with prices remaining flat to slightly lower across several regional markets. Price hikes announced by mills were largely defensive and proved difficult to sustain amid weak demand. The report projects sluggish volume growth in the first half of FY27, as subdued demand and new production capacities coming onstream continue to constrain pricing power for manufacturers.
Regional trends were mixed during the month, with healthy cement demand recorded in western and southern markets alongside weaker traction elsewhere. Prices declined by around Rs 5 per bag in West and Central markets, increased by Rs 8 per bag in Hyderabad, and remained broadly stable across North and East markets.
The input-cost environment remained stable throughout July, providing a degree of relief for manufacturers. Diesel prices held steady at Rs 95 to Rs 105 per litre, TMT steel traded in the Rs 60 to Rs 66 per kg range, and cement prices across metropolitan areas ranged between Rs 380 and Rs 430 per bag. Overall building-material cost inflation for 2026 is projected to remain in the low-single-digit range, though soft demand and competitive intensity continue to keep producers focused on margin protection.
Despite seasonal execution delays, construction investment and order inflows remained positive. Schwing Stetter India is investing approximately Rs 400 crore in capacity expansion and a new greenfield facility to meet medium-term infrastructure demand. Meanwhile, NCC Ltd secured fresh orders worth Rs 1,052.71 crore in July, comprising Rs 590.38 crore in buildings and Rs 462.33 crore in water projects.
Underlying resilience was also reflected in core infrastructure output, which expanded by 5 percent year-on-year in June—the fastest growth rate in five months—driven by higher output in cement, electricity, and iron ore. The report expects construction and building-material demand to rebound as weather-related disruptions ease and the government’s infrastructure pipeline gathers momentum.
Capital market activity within the sector remained muted in July 2026, with no M&A or equity capital market transactions recorded. Private equity activity also remained constrained, totaling three deals in CY26, led by AllHome’s Rs 200 crore fundraise from Bessemer Venture Partners. The report highlighted that a significant portion of the building materials market continues to rely on the unorganized sector, where institutional investor participation remains limited without a distinct competitive edge.
