The cement sector is fast-emerging as a key monitorable in equity markets, in the wake of early signs of pricing recovery, potentially setting the stage for strong momentum in the coming year.
According to a recent note from Systematix Research, average cement prices pan-India improved by roughly Rs 7 per bag over the past month. This was largely led by price hikes in southern and eastern regions. This recovery comes at a time when the industry enters a seasonally strong quarter in terms of construction activity.
In Q3, cement companies under Systematix's coverage reported a robust volume growth of 17.6%. Meanwhile, JPMorgan has maintained an 'overweight' rating on the sector, pointing towards volume growth, cost cuts and consensus estimates that imply a material increase in profitability per ton.
Strong Demand And Capacity Utilisation
Ambuja Cements' management remains “very positive” on the sector, expecting industry demand to grow around 8% in FY26, driven by infrastructure activity, sustained housing demand and a recovery in rural construction.
The company is guiding for continued double‑digit volume growth with a clear roadmap to ramp acquired assets towards ~80% utilisation and lift consolidated capacity to 155 MTPA by March 2028.
UltraTech Cement has highlighted a positive demand outlook as well, on the back of a massive infrastructure pipeline that encompasses road, railway and elevated metro projects. Thanks to this momentum, management expects UltraTech's capacity utilisation to cross the 90% mark in the fourth quarter of fiscal 2026.
In order to capture this growing market share, top cement companies are heavily expanding, with JPMorgan noting that the top four companies are planning to add an aggressive 115 million tons of capacity over the next two years. Systematix, meanwhile, is foreseeing a healthy 7-8% volume growth for the industry in fiscal 2026.
The Pricing Conundrum
As far as pricing is concerned, JPMorgan indicated that February data shows signs of plateauing demand for only minor price hikes. The brokerage stressed that without volume upside, it will be difficult for companies to implement further price increases, thus making pricing discipline and reduced competition essential.
The firm adds that a sharp recovery in earnings is expected to be led by recent price hikes and the benefits of operating leverage as volumes ramp up.
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