Why is JM Financial bullish on UltraTech, JK Cement? All details here

JM Financial Institutional Securities has picked UltraTech Cement and JK Cement as its top picks in the cement sector; here's why

JM Financial Institutional Securities has picked UltraTech Cement and JK Cement as its top bets in the cement sector, forecasting price hikes in the coming months, and a possible cut in goods and services tax (GST) on cement that could lift sentiment in the months ahead. The brokerage has set its target as ₹14,150 per share on UltraTech and ₹7,700 per share on JK Cement. 

 

Stock performance 

Year-to-date (Y-T-D), individually, Ambuja Cements has gained 6.4 per cent, Birla Corp 5 per cent, Dalmia Bharat 36 per cent, JK Cement 51.2 per cent, Shree Cements 18 per cent, Star Cement 50 per cent, UltraTech 23 per cent, and Ramco Cements 12 per cent. However, ACC has lost 11.2 per cent. In comparison, Nifty50 was up 4 per cent.  

 

Price hike 

With the monsoon season nearing its end, the industry may attempt to hike prices in the coming months, believes the brokerage. JM Financial’s channel checks show pan-India cement prices declined by a marginal 1 per cent month-on-month (M-o-M) in August 2025, though they were up 4-5 per cent year-on-year (Y-o-Y). Regionally, prices were down by 1 per cent in the East, West, and South, and largely stable in North and Central markets. 

 

On a Q2FY26 (to date) basis, pan-India prices have corrected by 1 per cent quarter-on-quarter (Q-o-Q), led by a 4 per cent decline in the South and 1 per cent decline each in the North, East, and West, partially offset by a 2 per cent increase in the Central region.  

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Cement demand 

For Q2 FY26 (to date), the brokerage estimates  cement demand to be up in the low- to mid-single digits Y-o-Y while remaining broadly flat on a two-year compound annual growth rate (CAGR) basis.  Over the medium term, their analysts expect sustainable industry volume growth of about 6–7 per cent, supported by the government’s continued focus on infrastructure and housing and improving demand across rural and urban markets.

 

"Industry demand likely grew in the low- to mid-single digits Y-o-Y in August 2025, despite a favourable base, as persistent heavy rainfall continued to disrupt construction activity across several regions," the JM Financial note said.

GST 2.0 reforms sentimentally positive 

The potential rationalisation of GST on cement from 28 per cent to 18 per cent would be sentimentally positive for the sector,  JM Financial said, with some support for the housing segment, JM Financial said. 

 

However, it has warned that near-term demand elasticity may remain limited and that pricing behaviour after any GST cut — given opaque discounting in the sector — will be a key monitorable. GST rationalisation however, it cautions, could reduce incentive income for some players.  

Domestic petcoke demand rises 

Recent US tariffs weakened trade sentiment and added uncertainty for petcoke buyers, according to the brokerage's analysis. Pet coke is used as a primary fuel source in cement, lime, brick, and glass manufacturing, and especially in cement kilns and power plants.

 

Additionally, rising freight costs have made imported cargoes less competitive, prompting many buyers to increasingly source from domestic suppliers. Spot US petcoke cost, insurance, and freight (CIF) and landed prices at Indian ports currently stand at $113 per ton and $129 per ton, respectively — 8 per cent above the Q1FY26 average.