As of Could 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 beneficial properties over the quarter.
Within the South, cement costs surged by INR 35-40 per bag in April, marking a considerable 12% month-to-month leap. This was adopted by one other spherical of hikes in Could, though the sustainability of those will increase stays to be seen.
After a interval of weak margins, southern cement producers are actually prioritizing profitability, fastidiously balancing quantity development with margin enchancment.
The area can also be witnessing the combination of property following a wave of mergers and acquisitions, as corporations work to align newly acquired amenities with their operational requirements.The jap area noticed a 7% quarter-to-date rise in costs, though makes an attempt to push via additional hikes in Could had been shortly rolled again, reflecting the aggressive depth available in the market.The East is poised for vital capability growth, with an estimated 14 million tonnes each year of grinding capability to be added in each FY26 and FY27. This inflow of recent provide is anticipated 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 Could. The area benefited from robust cement offtake in April, pushed by authorities infrastructure initiatives and a rebound in personal and industrial development.
Nevertheless, demand softened in early Could on account 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 as a result of withdrawal of earlier reductions.
Nevertheless, sustaining these hikes has proved difficult, and common costs are up round 2% quarter-to-date. Demand in these areas stays subdued, significantly from the person housing phase and the broader development sector, although a pre-monsoon uptick is anticipated.
Each areas are set to see vital capability additions in FY26, which ought to preserve pricing disciplined within the close to time period.
Total, whereas demand has been tender on account of labor points, antagonistic climate, and slower authorities spending, the sector’s profitability has been supported by favorable gasoline costs and improved value efficiencies.
Though petcoke costs rose earlier within the 12 months, latest declines are anticipated to assist optimize gasoline prices going ahead.
The trade’s outlook stays optimistic, underpinned by a strategic concentrate on balancing quantity development with profitability, ongoing consolidation, and the potential for a requirement restoration as macroeconomic circumstances enhance and authorities spending picks up.
Sustaining latest worth hikes amid upcoming capability expansions and evolving demand dynamics shall 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 had been in keeping with 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 on account of heatwaves, development is anticipated to select up, with double-digit quantity development focused.
Price financial savings of INR86/t had 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 via greenfield and brownfield initiatives throughout North, Central, South, and East India. This growth will strengthen its market place and improve its pan-India presence.
The corporate is bettering its value construction with environment friendly gear, upgrades, and sustainability measures like rising 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 score, as JKCE is well-positioned amongst mid-sized cement corporations
(The creator is Head – Analysis, Wealth Administration, Motilal Oswal Monetary Companies Ltd)
(Disclaimer: Suggestions, options, views, and opinions given by consultants are their very own. These don’t signify the views of the Financial Occasions)
