Cement Sector: Volume Surges Amid Margin Pressures

The Indian cement industry recorded an impressive volume growth of approximately 8% year-over-year (YoY) in Q4 FY26. This surge was primarily propelled by sustained government spending on infrastructure, steady residential housing demand, and accelerated construction activities across major regional markets. Regional and large-cap players registered strong dispatch numbers during the quarter. $STARCEMENT led the industry with a 13% YoY volume growth, while JK Cement topped the large-cap segment at 12.2%. Market leader $ULTRACEMCO and $SHREECEM also posted healthy growth rates of 9.0% and 9.5% respectively, aided by capacity expansions. Persistent Margin and Cost Pressures: Despite robust sales and revenue growth, profitability remained constrained due to elevated freight, packaging, and energy expenses. International pet-coke prices hovered around $140–$155 per tonne, forcing companies to adopt alternative fuels and fuel-mix optimization to mitigate the steep input costs. Near-Term Profitability Challenges: Operating profits (EBITDA) per tonne are projected to contract sequentially by Rs 50–100 in Q1 FY27. This anticipated dip is a result of intense market competition, monsoon-led demand moderation, and the delayed realization of pan-India price hikes, which are expected to average Rs 8–10 per bag. Constructive Medium-Term Outlook: For the fiscal year 2027 (FY27E), the sector's volume growth is projected to stabilize between 6% and 7% YoY. Analysts maintain a positive medium-term outlook as cost pressures normalize, favoring cost-efficient market leaders like UltraTech Cement and east-focused players like Nuvoco Vistas due to its aggressive capacity expansion plan.