Cement makers likely to log better Q3 earnings as volume rebounds

India's top cement makers may post stronger Q3 FY26 earnings as volumes rebound and operating leverage improves, even as pricing remains under pressure amid intense competition

Top cement players of the country may report improved earnings in the third quarter of financial year 2026 (Q3FY26) on a year-on-year (Y-o-Y) basis amid volume growth and operating leverage, even as the realisations are expected to remain muted due to pricing pressures. 

The industry is estimated to have seen a volume growth of 6.5-7.5 per cent Y-o-Y in the quarter under review, driven by a pickup in construction activity after the state elections, the festival season, and the monsoon later in the quarter, on a lower base, according to Sehul Bhatt, director, Crisil Intelligence. 

Elara Capital estimates pan-India cement prices to be up about 2 per cent Y-o-Y but down nearly 2 per cent Q-o-Q (adjusted for GST rate cut) at around ₹336 per 50-kg bag, driven by heightened competition. Realisations are expected to have grown by 1-2 per cent Y-o-Y, but down by about 2 per cent Q-o-Q. 

The Q-o-Q decline in prices was led by a 4 per cent drop in prices in South India amid higher capacity additions and 3 per cent correction in East India prices, while North and West India saw a 1 per cent decline and Central India remained flat.

According to the analysts at Motilal Oswal Financial Services, blended realisation for its coverage universe is estim­a­ted to have grown 1 per cent Y-o-Y (but down 2 per cent Q-o-Q) to ₹5,359 per to­nne, while earnings before interest, taxes, depreciation, and amortisation (Ebitda) per tonne is estimated to rise 21 per cent Y-o-Y (down 1 per cent Q-o-Q) to ₹890. Me­a­nwhile, profits are estimated to surge by 66 per cent Y-o-Y amid operating leverage. 

“The price corrections appear to be driven by competitive intensity and the impact of GST rationalisation, though companies are now anticipating a price hike of ₹10–20 per bag from January 2026 in both trade and non-trade segments as the high-demand Q4 period approaches, which should help in maintaining better profitability if implemented effectively,” said Munish Aggarwal, sector lead, industrials at Equirus. 

UltraTech Cement and Ambuja Cements are expected to have grown faster than the industry, in double-digits in terms of volumes, amid their inorganic expansions and pan-India presence. 

Analysts at Axis Securities noted that, during the quarter, non-trade demand accelerated, led by a decline in cement prices following the GST rate cut. The GST rate cut on cement is expected to enhance premium cement demand, benefiting Tier-I players with stronger brand portfolios.

 

Considering the input costs, on a Y-o-Y basis, power and fuel costs are estimated to be higher by 8 per cent at ₹1,220 per tonne with stable bulk diesel. Analysts at JP Morgan believe that the cost pressures should be “manageable”.

 

Going forward, analysts at Centrum Broking are expecting demand to remain healthy through Q4FY26 as construction activity enters its peak phase. However, with continued government oversight on GST pass‐through and volume remaining the key priority for cement companies, they expect price hikes to remain limited and largely demand-led in the near term.

 

In FY26, according to Icra, the Indian cement industry is expected to maintain a healthy growth trajectory of 6.5-7.5 per cent, supported by sustained infrastructure spending and robust residential demand. In FY26, the profitability is projected to improve significantly, with operating profit before interest, taxes, depreciation and amortisation per metric tonne rising to ₹ 900–950 from the lows of ₹810 in FY25, aided by better pricing and higher volumes.