Cement makers upbeat on Q2 sales, expect second half of FY26 to be better

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Leading cement companies, buoyed by a high single-digit volume growth in the July-September quarter along with an increased sales realisation, expect a better performance in the second half of the current fiscal, betting big on the housing sector and the government's spending on key infra projects.

Top five cement makers such as UltraTech, Ambuja Cement, Shree Cement, Dalmia Bharat and Nuvoco Vistas have reported up to 18 per cent growth in their revenue from operations in the second quarter ended September, backed by healthy sales realisations, benign costs and premiumisation.

As prices of coal have declined and that of diesel stable on a year-to-year basis, even though the rate of petcoke increased, cement companies in their latest earnings calls said they expect a better performance in the second half (H2) of FY26, to be led by the individual home builders (IHB) segment in rural and urban areas, helped by factors such as a good monsoon and recent tax incentives and GST reforms by the government.

UltraTech, which has seen about 13 per cent growth in rural markets, expects the IHB segment to continue to drive demand, and it is seeing continuous announcements of new infrastructure projects, which will help the overall demand sentiment.

"The housing sector would be the key driver for the growth, and particularly the rural housing, demand has been good, and with the good monsoon actually this year and the revision in the MSP price and kind of thing, I think rural India is likely to do very well," Managing Director Kailash C Jhanwar had said during the company's earnings call.

On the urban side, the company said that with the change in GST rates, personal income tax rates, and softening of interest, there are good green shoots and the urban demand is also likely to move further.

In the September quarter, UltraTech's consolidated sales volumes were up 6.9 per cent to 33.85 metric tonnes.

The all-India average cement price increased by 2 per cent YoY in September 2025 to Rs 341 per 50-kg bag.

"In H1 FY2026, the prices were up 6 per cent YoY at Rs 346/bag, while it declined by 3 per cent on a QoQ basis on account of monsoons and festive disruptions. In FY2025, cement prices declined by 7 per cent YoY to Rs 338/bag," according to an ICRA report.

In October this year, coal prices declined by 17 per cent YoY to USD 108/MT, and petcoke prices increased by 18 per cent YoY at Rs 12,000/MT. Diesel prices were stable at Rs 88/litre on a YoY basis.

"In 7M FY2026, coal prices were lower by 12 per cent YoY, while petcoke prices increased by 3 per cent. Diesel prices remained stable on a YoY basis," said ICRA, expecting "cement volumes to grow by 6-7 per cent YoY to 480-485 million MT in FY2026, backed by sustained demand from the housing and infrastructure sectors."  Adani Group firm Ambuja Cements CEO Vinod Bahety said, despite headwinds from the prolonged monsoons, the cement sector will benefit from tailwinds of several favourable policy measures, including GST 2.0 reforms.

During the earnings call, Bahety, talking about the industry outlook, said "cement demand remain bullish".

"In Q2, although it was moderate and grew by -- at the industry level, say, 4 per cent. But my overall yearly target remains between 7 to 8 per cent... There is an improved economic sentiments, higher investments in both public and private sectors," he said.

Ambuja Cements, which owns controlling stakes in ACC, and acquired companies such as Orient Cement, Sanghi Industries and Penna Industries, reported the highest ever sales volume in Q2 series at 16.6 million tonnes, up 20 per cent on a Y-o-Y basis in the latest July-September quarter. Its revenue was at Rs 9,174 crore, up 21 per cent along with a price gain of 3 per cent.

Shree Cement Managing Director Neeraj Akhoury said: "We have seen demand growth almost similar across the country, except some states, which have been lower, and some states have been higher. Not to compare region-wise, state wise one can do some comparisons.

"Going forward also, I think this trend should continue. I would expect north and west to be slightly better than the rest of the country."  Shree Cement sales volume in Q2/FY26 was "up by 6.8 per cent on a YoY basis", and its revenue from operations was up 17.43 per cent to Rs 4,761.07 crore.

Dalmia Bharat MD & CEO Puneet Dalmia said he believes "the second half of the year should witness a pick-up in momentum, with improvement in customer sentiment, pent-up demand and consecutive good monsoon".

In fact, the recent RBI move to potentially allow ECBs (extra commercial borrowings) for the real estate sector could further support cement demand from the housing sector in the medium to long term.

Dalmia Bharat's revenue from operations was up 10.68 per cent to Rs 3,417 crore in Q2.

Nuvoco Vistas Corp Managing Director Jayakumar Krishnaswamy said Q2 witnessed moderate growth in cement offtake as construction activities slowed due to the intense monsoon and the onset of the festive season.

"However, looking ahead, we remain positive on demand. As of August 2025, only about 38 per cent of the central government planned capex and 21 per cent of the state government planned capex for FY26 have been spent so far, indicating substantial capex potential for the rest of the fiscal period. Cement demand is expected to pick up in the second half of the year," he said.