FY26 Outlook: Cement sector to see 63% rise in earnings, high volumes, surge in demand and more

Synopsis: Cement demand is rebounding with strong November growth and a positive December outlook. Prices remain soft for now due to GST-linked caps, but Jefferies expects Q4 recovery and stays optimistic on key players like Ambuja, UltraTech, and JK Cement.

India’s cement sector is showing early signs of revival, with improving demand trends and expectations of a near-term price recovery. Fresh brokerage checks suggest that both consumption and market sentiment are strengthening, setting the stage for a more upbeat Q4.

According to B&K Securities’ channel checks, cement demand in November 2025 improved noticeably in the second half of the month, resulting in high single-digit year-on-year volume growth. This suggests that market activity strengthened toward the end of the month, likely driven by construction momentum and restocking trends.

The outlook for December 2025 is also portrayed as positive, with expectations of continued healthy demand. Additionally, dealers anticipate that cement companies may introduce a ₹10–15 per bag price hike in the following week to realign prices with post-GST cost structures. This indicates an effort by manufacturers to restore margins amid rising input costs and stable demand conditions.

According to Jefferies, November was a muted month for pricing, with cement rates slipping about 0.5% month-on-month. Quarter-to-date averages also appear soft, showing an estimated 1.5–2% decline compared to the previous quarter. This weakness is attributed to pricing caps that emerged following the rollout of a new GST structure, which has limited near-term upward price adjustments.

Despite the temporary moderation, Jefferies’ checks indicate that pricing could improve in the fourth quarter as demand strengthens. They anticipate a recovery in prices during Q4, supported by better market traction and seasonal demand uplift. 

Over a 12-month horizon, Jefferies remains constructive on the cement sector, highlighting companies such as Ambuja, UltraTech, and JK Cement as favourable picks within the space.

Industry Outlook

India’s cement industry outlook for FY26 remains robust, with volume growth projected at 6-7% YoY to 480-485 million tonnes, fueled by housing initiatives like PMAY, infrastructure spending, and urbanization. Capacity additions of 40-45 MTPA, led by eastern and northern regions, will push total capacity toward 700 MTPA while maintaining 70% utilization.​

India’s cement sector is set for a sharp turnaround in FY26, with earnings expected to rise 63% year-on-year, driven by a low base, strong volume growth, and continued cost-saving measures. Better operational efficiencies, lower logistics costs, improved fuel usage, and a greater push toward premium and trade-channel products are helping companies strengthen margins.

However, the outlook is not without risks. Pricing growth remains subdued, and more than 175 Mta of new capacity planned for FY26–28 could pressure realisations. While infrastructure spending and rural housing demand should support volume growth, profitability will rely heavily on tight cost control, efficiency gains, and a rising share of premium products if price hikes continue to lag.

Written by Manideep Appana

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