Cement volumes in India for the July‑September quarter are projected to grow mid‑ to high‑single digits, a figure that surpasses initial market expectations and lifts the sector’s earnings outlook. Indrajit Agarwal, Senior Research Analyst at CLSA, noted that the uptick in demand has already materialised in July and August, implying that the sector’s output trajectory will remain robust.
Yet, the stronger volumes won’t shield the industry from a near‑term margin squeeze. The second quarter, traditionally a low‑volume period, will see lower fixed‑cost absorption, while the spike in petcoke prices from March to May will hit the bottom line. Agarwal estimates a correction of ₹200‑250 per tonne in earnings‑before‑interest‑taxes‑depreciation‑amortisation, though the impact will differ across regions and maintenance regimes.
Price dynamics are expected to improve once the monsoon subsides. Cement prices have stayed largely flat or dipped slightly in Q2, but a 1‑1.5% increase is forecast for the second half of the year, with a sharper 2‑3% rise anticipated in March‑April. If fuel costs remain stable, industry profitability could edge ₹250‑300 per tonne higher by year‑end compared to Q2.
Within the sector, large‑cap players are positioned as more attractive bets. Ultratech Cement emerges as the high‑conviction pick because of its clear cost‑saving roadmap and planned capacity expansions, while Shree Cement and Ambuja Cements also show promise due to their focus on profitability over sheer volume. Regional firms, by contrast, risk greater volatility from local demand swings and weather patterns.
Looking ahead, structural levers such as additive utilisation and renewable energy adoption are expected to further trim costs and improve ESG metrics. Consolidation will likely continue, but through organic capacity additions rather than acquisitions, with companies like Ultratech adding a substantial share of new output over the next three to four years.