Cement sector set for H2FY26 upswing; JK Cement tops Nuvama's picks

While monsoons and consumption deferrals following the GST rationalisation impacted demand in Sep'25, prices largely held firm, signalling resilience in the sector, Nuvama analysts said

Despite a seasonally weak quarter marked by subdued volumes, analysts remain bullish on the cement sector and JK Cement stock continues to stand out as the top pick. 

 

While monsoons and consumption deferrals following the Goods and Services Tax (GST) rationalisation impacted demand in September 2025, prices largely held firm, signalling resilience in the sector, Nuvama Institutional Equities analysts said.

 

“Demand was weak in September 2025 due to monsoons and deferral of consumption due to GST rationalisation; prices were largely steady,” Parvez Qazi and Shrey Mehta of Nuvama noted. The trend, they believe, will reverse in the second half of FY26 (H2FY26), aided by pent-up demand and higher government spending.

 

 

A key driver for optimism is the recent GST cut on cement, from 28 per cent to 18 per cent, which is expected to stimulate both demand and long-term pricing trends. “The reduction in GST rate on cement from 28 per cent to 18 per cent is positive for the sector; while it may constrain price hikes in the near term, we believe it shall boost prices and premiumisation trend over the medium term,” the brokerage said. Importantly, cement makers have passed on the GST benefits in their entirety across regions.

 

Across major regions, demand remained weak in September due to monsoon disruptions and GST-related deferments, though prices stayed largely stable. In the eastern and southern markets, demand was soft but expected to improve post the festive season, with analysts anticipating an uptick once construction activities resume. 

 

Northern markets also witnessed subdued demand due to heavy rains, but early signs of recovery are visible as infrastructure projects restart. Prices in the north fell marginally (around ₹2-3 per bag) before the GST cut and are now expected to remain steady or inch up. In the central and western regions, demand trends mirrored the national pattern, with some price hikes in the west sustaining despite the GST rate reduction.  ALSO READ | Systematix bets on Rainbow Medicare's pan-India leap; sees 27% upside 

On the cost front, input prices showed a mixed trend. International pet coke prices rose around 5 per cent, while non-coking coal prices dipped by 1 per cent compared with Q1FY26 averages. Analysts expect that ‘various cost-efficiency measures undertaken by players along with softening fuel prices (lag impact) should help in keeping cost under check.’

 

Overall, cement prices were down around 1.5 per cent sequentially during September–Q2FY26, a seasonally weak period. However, the broader outlook remains upbeat. 

 

Analysts foresee both prices and volumes improving year-on-year in H2FY26 on the back of a low base, pent-up demand, and government-led infrastructure push. 

 

Amid this backdrop, “JK Cement stock (BUY) remains our top pick,” the analysts said, highlighting its operational efficiency, robust regional mix, and strong positioning to capture growth as the sector turns a corner.