 "cement, cement sector")
Year-on-year (Y-o-Y) gains in cement prices and demand, supported by a low base, are expected to bolster the profitability of leading cement companies in the first quarter of FY26 (Q1 FY26), despite seasonal softness due to the monsoon in June.
“Realisations are expected to inch up 1–2 per cent sequentially and Y-o-Y, driven by the increase in cement prices,” said Sehul Bhatt, director at Crisil Intelligence.
According to Elara Capital, the average pan-India cement prices rose approximately 6 per cent Y-o-Y and 3 per cent quarter-on-quarter (Q-o-Q) in Q1 FY26 to ₹377 per bag. The Y-o-Y increase reflects a rebound from Q1 FY25, when prices declined by about 4 per cent. However, prices softened in June 2025 with the onset of the monsoon.
Volume growth is estimated at 2–5 per cent Y-o-Y, tempered by several factors including intense heatwaves, early monsoon onset, delayed government fund disbursements, geopolitical uncertainty, and rising input costs — particularly in bricks and sand in select regions.
Q1 FY25 also saw similar headwinds, including election-related disruptions, leading to a favourable base for comparison. The price uptick was largely driven by strong demand in April and May, but growth slowed in June. Analysts at Systematix Institutional Equities noted that although government infrastructure spending has increased, execution on the ground remains sluggish.
Improved realisations on a Y-o-Y basis are likely to enhance profitability. Ravleen Sethi, Director and Head of Corporate Ratings at Care Ratings, estimates an increase of ₹200–300 in earnings before interest, tax, depreciation, and amortisation (Ebitda) per tonne in Q1 FY26, though the impact will vary across companies.
Additionally, fuel costs provided some relief. “In Q1 FY26, coal prices were down 6 per cent Y-o-Y, pet coke prices were up 1 per cent, and diesel remained flat. On a Q-o-Q basis, coal and pet coke declined 9 per cent and 4 per cent, respectively, while diesel was stable,” said Maitri Vira, assistant vice-president at Icra.
While Q-o-Q demand growth may moderate due to the early monsoon, cost-optimisation measures — including increased use of green power, reduced lead distances, and greater use of alternate fuels — may help offset pressure on margins.
“Companies in the South and East may see improved profitability Q-o-Q, especially following the strong price hikes in April,” noted analysts at Equirus Securities.
Top players such as UltraTech Cement and Ambuja Cements are expected to outperform industry growth, buoyed by acquisitions and organic expansion undertaken in recent years.
Adani group’s Ambuja has acquired Orient Cement, Penna Cement, Sanghi Industries, and MyHome Industries’ plant, while Aditya Birla group’s UltraTech Cement has added assets from India Cements, Burnpur Cement, and Kesoram Cement.
Q1FY26 marks the first quarter in which these players will report consolidated volumes from their acquisitions.
“For UltraTech, the volume contribution will reflect in Q1, though the financial impact may take longer due to legacy challenges from Kesoram and India Cements,” an analyst said.
“In Adani’s case, Sanghi Industries will contribute to Q1 performance, but Penna Cement’s impact will be felt later, as the deal is not fully closed yet. Still, Adani will see a volume uptick due to acquired capacity,” the analyst added.
