Cement firms' Q4 volumes grow, but realisations decline amid weak pricing

According to analysts, the consolidation in India's cement sector and the weak demand have put pressure on the pricing environment

Top Indian cement companies reported a healthy sales volume growth in the quarter ended March (Q4FY25), but saw a decline in their realisations amid weak pricing.

 

Excluding Shree Cement (whose blended realisation remained flat year-on-year), UltraTech Cement, Ambuja Cements, JK Cement, Dalmia Bharat, Ramco Cements, and Birla Corp posted decreased realisations on a Y-o-Y basis.

 

In Q4FY25, pan-India cement prices stood at Rs 362/bag, down by 3 per cent Y-o-Y. The South was hit the most with a 10 per cent decline in prices, according to Crisil Intelligence. Quarter-on-quarter (Q-o-Q), the prices grew by 2 per cent, with Q4FY25 being a seasonally strong quarter.

 

According to Khushbu Lakhotia, director, India Ratings & Research, the cement price reduction was largely driven by a reduction in power and fuel costs, given the benign coal and petcoke prices.

 

“With a slow start to demand, large capacity additions and an increasing competitive intensity in FY25, cement prices witnessed the sharpest decline in nearly two decades. Prices remained weak as industry players focused on maximising sales volumes and market share growth,” Lakhotia said.

 

UltraTech commissioned 17.40 million tonnes per annum (mtpa) capacity during FY25, while Ambuja surpassed 100 mtpa. Dalmia Bharat’s capacity in FY25 increased to 49.5 mtpa from 44.6 mtpa in FY24.

 

According to analysts at Mirae Asset Sharekhan, the consolidation in India’s cement sector and the weak demand have put pressure on the pricing environment. The overall cement demand, however, improved by 4 per cent during Q4FY25, leading to higher volumes.

 

Apart from Dalmia Bharat and Ramco Cements, all the other top firms posted an increase of anywhere between 3.3 and 16.9 per cent in their sales volume due to improved cement demand. Overall, the industry volume grew by 5 per cent Y-o-Y. UltraTech’s volume growth was driven by its acquisitions of India Cements and Kesoram, while Ambuja’s growth was on the back of Orient Cement and Penna Cement.

 

However, blended earnings before interest, taxes, depreciation, and amortisation (Ebitda) of UltraTech and Ambuja declined on a Y-o-Y basis, despite lower input costs and better operating leverage, while that of Shree, Dalmia Bharat, and JK Cement improved.

 

An industry expert, on the condition of anonymity, stated that the profitability of UltraTech and Ambuja saw only a limited impact from acquisitions. The overall performance of the two cement giants remained strong amid a comparatively low share of India Cements in UltraTech’s total volumes and Ambuja completing the acquisition of Orient Cement in April 2025 (Q1FY26).

 

Sequentially, all the top cement makers witnessed an improved, positive growth in blended Ebitda.

 

All the cement firms were able to reduce total costs by 1-7.2 per cent Y-o-Y in Q4FY25 due to lower input costs, particularly that of fuel, and improved operating leverage. However, despite a reduction of around Rs 200/t in costs, the industry’s Ebitda improved only marginally by Rs 20-30/t due to the continued weakness in cement prices, according to Lakhotia.

 

Overall in FY25, the prices declined by 7 per cent Y-o-Y to Rs 340/bag. Meanwhile, the top companies’ volumes grew anywhere between less than 1 per cent and over 10 per cent Y-o-Y. The blended Ebitda and realisations also declined. The companies managed to reduce their total costs in FY25.

 

For FY26, the companies are optimistic about improved cement demand on the back of the government’s focus on infrastructure and housing demand and price environment.

 

According to the analysts at Mirae Asset Sharekhan, with the return of government capex, the demand and pricing are expected to improve. The margins of the whole sector are expected to improve from here on and will increase profitability.

 

UltraTech’s management stated that prices showed sequential improvement in April 2025 across most regions, notably in the southern markets, although overall realisation growth remained modest. It stated that April pricing trends were better compared to both March-end levels and the Q4 FY25 average.

 

According to the analysts at JM Financial, the industry's profitability is likely to improve further in Q1FY26. Pan-India average cement prices have increased by 4 per cent Q-o-Q in the quarter so far (over Rs 15/bag), mainly led by sharp price hikes in the South and the East, while other regions were broadly flat on a sequential basis.

 

“With the early onset of the monsoon, we see an increasing possibility of some price reversal over the next few days,” the analysts noted.

 

According to Lakhotia, the decadal high-capacity additions announced by companies, in addition to the ramp-up of the acquired assets that were operating at sub-optimal capacities earlier, could limit the uptick in prices despite a mid-to-high single-digit demand growth. “Price hikes were taken by companies over April-May, that could support realisations in Q1FY26, although moderations are likely over June-July with the early onset of monsoons.”

 

Going ahead, the cement firms have planned aggressive capacity expansion plans with UltraTech leading the pack. The company aims to expand its grey cement capacity to 195.8 mtpa from the current 183.4 mtpa. Ambuja aims to expand its capacity to 118 mtpa by FY26, while Shree Cement aims to enhance its capacity to over 80 mtpa by 2028 from the current capacity of 62.8 mtpa. Dalmia Bharat is eying a capacity of 75 mtpa by FY28 from the current 49.5 mtpa.