13 - 07 - 2026

India cement demand to grow at 6-7% in Q1: HDFC Securities

India’s cement demand is expected to grow at 6-7 per cent year-on-year (YoY) in Q1FY27, with offtake muted in May before a delayed monsoon helped a recovery in June, brokerage HDFC Securities said in a report.

Indian cement companies are expected to post a contraction in operating margins for the quarter ended June 2026 (Q1FY27), as rising fuel and packaging costs outpaced price increases, the brokerage said.

Average EBITDA (earnings before interest, taxes, depreciation and amortisation) margin for its coverage universe is estimated to fall by about ₹50 per tonne quarter-on-quarter (QoQ) to ₹987 per tonne in Q1FY27, and by about ₹145 per tonne YoY, the report said.

Aggregate volumes are estimated to rise by about 7 per cent YoY, implying about 10 per cent QoQ seasonal decline, while cement prices rose about 2-3 per cent QoQ across regions, according to the report.

Coal, pet coke prices up

The West Asia turmoil has driven up coal and pet coke prices in Q1FY27, and these are expected to peak in the second quarter of the financial year (Q2FY27).

Average opex (operating expenditure) for the coverage universe is estimated to rise 4 per cent QoQ and 4 per cent YoY, driven by higher packing and logistics costs and a lower-offtake-led operating leverage loss, the report said.

Aggregate net sales for the 15 companies under coverage are estimated at ₹58,630.1 crore for Q1FY27, up 6.9 per cent YoY but down 8 per cent QoQ. EBITDA is estimated at ₹10,407.2 crore, down 6.9 per cent YoY and 14.3 per cent QoQ, with an EBITDA margin of 17.8 per cent. Net profit is estimated at ₹4,093.3 crore, down 18 per cent YoY and 44 per cent QoQ.

UltraTech Cement, Shree Cement, Dalmia Bharat, JK Cement and Sagar Cement are expected to post volume growth of 9 per cent, 11 per cent, 10 per cent, 13 per cent and 12 per cent, respectively, outperforming the sector. Ambuja Cement is expected to see flat to marginal volume decline after cutting sales from less profitable plants and the non-trade segment.

UltraTech (₹1,179 per tonne), Shree Cement (₹1,093 per tonne) and Star Cement (₹1,493 per tonne) are expected to lead on margin, while Sagar Cement is expected to post the weakest margin at ₹370 per tonne. Ambuja Cement, on a consolidated basis, is expected to report a margin recovery of about ₹111 per tonne.

Soft demand in Q2

HDFC Securities does not expect cement prices to rise QoQ in Q2FY27 as demand softens with the monsoon, and said industry margin could contract further by more than ₹100 per tonne QoQ to below ₹880 per tonne. It expects margins to recover in the second half of the financial year (H2FY27) if the West Asia turmoil subsides.

The brokerage expects its coverage universe to deliver a compound annual growth rate (CAGR) in volumes of about 8.5 per cent over FY26-28, with margins rising by about ₹40 per tonne YoY in FY27 and about ₹125 per tonne in FY28. It kept its earnings estimates, ratings and target prices unchanged, with UltraTech Cement and JK Cement as its top picks.