The Indian cement industry is in revival mode with volume growth, stable demand and the recent price hike, stated a report by InCred Equities, while maintaining that profitability is expected to rise further. Another report by Motilal Oswal Financial Services Ltd (MOFSL) had also stated the cement industry is expected to witness a robust recovery in the second half of FY25, driven by pent-up demand, a rebound in government capex, and sustained momentum in the real estate and housing sectors.
The cement demand, JM Financial said, is expected to remain strong in coming years with a growth of 7-8 per cent CAGR over FY25E-27E. The report had stated that after a brief slowdown anticipated in FY25, the sector is expected to witness strong growth, driven by positive demand fundamentals and structural changes within the industry.
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A healthy volume growth in Q3
InCred Equities said, “We believe the industry clocked a YoY growth of ~6-7 per cent in Q3FY25F based on our analysis of top listed companies, where our coverage universe grew by 9 per cent yoy.” In its coverage stocks, Ultratech Cement and Ambuja Cements (consol.) outperformed the industry with double-digit growth, and also gained market share. It further added that Shree Cement’s strategic focus on profitable volume led to volume decline of around 1 per cent and Dalmia Bharat’s volume fell 1.5 per cent YoY due to discontinuation of JPA assets tolling arrangement; however, it benefited JK Cement (with increased volume in central India). Management commentaries, the brokerage report stated, highlighted that overall demand improved in Q3, as seen in early trends visible from government spending in some regions. Most players expect cement demand to grow by 6-7 per cent in Q4FY25F and display a similar growth in FY26F.
Demand boost favourable for prices
The average realization improved on QoQ basis by around 1 per cent in Q3FY25, for the first time since Q3FY24, with prices showing improvement across regions barring South India. “In our coverage universe, Dalmia Bharat posted the highest approximately 3 per cent QoQ improvement in blended realization followed by Ultratech Cement/JK Cement at 1.6%/1.4%,
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