As of Might 2025, the all-India common cement worth has risen by INR 5 per bag on a month-on-month foundation and by INR 16 per bag quarter-to-date within the first quarter of FY26, translating to a 5% enhance.
This worth power is primarily attributed to sharp hikes within the southern area, adopted by the jap markets, whereas different areas have additionally reported reasonable positive factors over the quarter.
Within the South, cement costs surged by INR 35-40 per bag in April, marking a considerable 12% month-to-month soar. This was adopted by one other spherical of hikes in Might, though the sustainability of those will increase stays to be seen.
After a interval of weak margins, southern cement producers at the moment are prioritizing profitability, fastidiously balancing quantity development with margin enchancment.
The area can also be witnessing the combination of belongings following a wave of mergers and acquisitions, as firms work to align newly acquired services with their operational requirements.The jap area noticed a 7% quarter-to-date rise in costs, though makes an attempt to push by way of additional hikes in Might have been rapidly rolled again, reflecting the aggressive depth out there.The East is poised for important capability enlargement, with an estimated 14 million tonnes every year of grinding capability to be added in each FY26 and FY27. This inflow of latest provide is predicted to intensify competitors and will result in elevated worth volatility over the medium time period.
Within the West, costs remained largely flat in April however noticed a modest INR 10 per bag enhance in Might. The area benefited from robust cement offtake in April, pushed by authorities infrastructure tasks and a rebound in personal and business building.
Nonetheless, demand softened in early Might as a consequence of unseasonal rains and labor shortages. Elevated inter-regional motion of cement can also be serving to to maintain a lid on additional worth hikes within the area.
The North and Central areas skilled minor worth will increase of as much as INR 5 per bag in April, primarily because of the withdrawal of earlier reductions.
Nonetheless, sustaining these hikes has proved difficult, and common costs are up round 2% quarter-to-date. Demand in these areas stays subdued, notably from the person housing phase and the broader building sector, although a pre-monsoon uptick is anticipated.
Each areas are set to see important capability additions in FY26, which ought to maintain pricing disciplined within the close to time period.
Total, whereas demand has been delicate as a consequence of labor points, opposed climate, and slower authorities spending, the sector’s profitability has been supported by favorable gasoline costs and improved price efficiencies.
Though petcoke costs rose earlier within the 12 months, current declines are anticipated to assist optimize gasoline prices going ahead.
The business’s outlook stays optimistic, underpinned by a strategic give attention to balancing quantity development with profitability, ongoing consolidation, and the potential for a requirement restoration as macroeconomic circumstances enhance and authorities spending picks up.
Sustaining current worth hikes amid upcoming capability expansions and evolving demand dynamics might be key to the sector’s efficiency within the coming quarters.
UltraTech Cement: Purchase| Goal Rs 13900| LTP Rs 11,889| Upside 17%
UltraTech Cement’s Q4FY25 outcomes have been according to expectations, with EBITDA up 12% YoY at INR46.2b and PAT up 8% YoY at INR24.9b.
EBITDA per ton fell 4% YoY, whereas margins remained flat at ~20%. Regardless of early FY26 demand weak spot as a consequence of heatwaves, development is predicted to select up, with double-digit quantity development focused.
Value financial savings of INR86/t have been achieved in FY25, with additional INR214/t focused by FY27. Internet debt/EBITDA is robust at 0.5x. The inventory is valued at 20x FY27E EV/EBITDA. We estimate a CAGR of 15%/29%/34% in consolidated income/EBITDA/PAT over FY25-FY27, aided by inorganic development.
JK Cement Ltd (JKCE): Purchase| Goal Rs 6000| LTP Rs 5243| Upside 14%
JKCE plans to double its gray cement capability by FY30 by way of greenfield and brownfield tasks throughout North, Central, South, and East India. This enlargement will strengthen its market place and improve its pan-India presence.
The corporate is bettering its price construction with environment friendly tools, upgrades, and sustainability measures like growing inexperienced energy and Thermal Substitution Charge (TSR). It has delivered sturdy quantity (gray cement) CAGR of ~16% over FY20-25.
We estimate JKCE’s income/EBITDA/PAT CAGR at 15%/21%/33% over FY25-27, pushed by robust quantity development and profitability. We preserve a purchase ranking, as JKCE is well-positioned amongst mid-sized cement corporations
(The writer is Head – Analysis, Wealth Administration, Motilal Oswal Monetary Providers Ltd)
(Disclaimer: Suggestions, ideas, views, and opinions given by specialists are their very own. These don’t characterize the views of the Financial Instances)
