Cement Prices May Rise 4% Spelling Good News For Sector
The sustainability of these price hikes remains a key monitorable, according to CLSA.
Indian cement sector can see a price rise of 4% in the second half of financial year 2025, according to CLSA and this will spell good news for the companies which have been hit by low prices pan-India for the past several quarters. However, according to the brokerage, sustainability of these price hikes remains a key monitorable.
Cement prices increased Rs 10-30 per bag in early December. The increase was the highest in India's east and central regions at Rs 20-30 per bag, while the rest saw a Rs 10 increase.
This implies that pan-India cement prices in Q3 have so far gained 3.5% quarter-on-quarter. Prices, however, are still down 5% on an annual basis.
As per CLSA, cement demand remained weak all October, but did see a gradual recovery in November, post the festive season. This has made the brokerage positive about a recovery in cement demand in second half of the year, as well as fiscal 2026.
Cement Sector Outlook
The key question now is that whether these price rises will sustain. A dealer check by Nomura at the start of December showed that dealers don't expect these price hikes to sustain.
Goldman Sachs belives that the next financial year will turn out better than FY25. "We expect demand growth of ~7% YoY in 2HFY25/FY26, compared to 2% YoY in 1HFY25," a report by the brokerage said.
The recovery will be lead by rural and urban real estate demand next year. The three largest cement companies alone (Ultratech, Ambuja, and Shree) are scheduled to add 13mnt/41mnt cement capacity in 2HFY25/FY26.
"We expect the industry to add nearly ~45-50mnt of capacity in FY26, substantially higher than the ~30mnt expected incremental demand in FY26," Goldsman Sachs said.
