Jefferies Forecasts Cement Turnaround in FY26 on South Price Rise

05 Jun 2025 CW Team

Global brokerage Jefferies has forecasted a turnaround in the profitability of the Indian cement sector in FY26, driven by a pricing recovery in the southern region starting from the first quarter. The firm identified Ultratech Cement, Shree Cement, and JK Cement as its preferred picks due to their strong earnings recovery momentum.

Jefferies reported that the cement sector showed a robust rebound in the March quarter (Q4 FY25), with EBITDA rising by 11 percent year-on-year and 67 percent sequentially. This improvement was mainly attributed to firming prices and steady volume growth. Earlier, Jefferies had included Ambuja Cements in its model portfolio, anticipating margin improvements amid decreasing competitive intensity in the industry.

Adding to the positive outlook, Systematix Research projected a demand growth of 6 to 7.5 percent for the cement industry in FY26. The research highlighted that consolidation-driven discipline, alongside strong infrastructure and housing demand, is guiding the sector towards a more stable and profit-friendly cycle.

Further validation came from Nomura's on-the-ground checks. The brokerage's dealer channel checks indicated notable price increases in the Indian cement market in June 2025, especially in South India, which significantly contributed to raising the national average.

By early June, the pan-India average cement price had increased by Rs 2 per bag to Rs 358, primarily due to a Rs 19 per bag rise in South India. Tamil Nadu and Kerala were the main contributors to this surge since mid-May. Conversely, minor price declines were observed in other regions, with decreases of Rs 3 per bag in Central India, Rs 5 in the West, and Rs 2 in parts of the South outside the major spike areas.

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