According to Upstox Securities, cement prices have continued their momentum into the first quarter of FY27, with adjusted prices expected to rise 1-3% during the fiscal year. This price recovery comes despite the earlier goods and services tax (GST) rate cut, which had initially pressured pricing. The sustained price momentum indicates underlying demand strength and market confidence in the sector's recovery trajectory. Research Analyst Girija Shankar Ray from Nirmal Bang Institutional Equities expects meaningful price increases in the second half of FY27, with pricing remaining disciplined and gradual rather than aggressive.
According to Nirmal Bang Institutional Equities, India's cement industry is positioned for a strong growth phase with FY28 shaping up as a boom year for volumes. Research Analyst Girija Shankar Ray expects demand to improve in the second half of FY27, driven by pent-up demand from FY25-26 that is expected to materialise from the second half of FY27 onwards. The analyst noted that even FY28 will be a boom year for cement volume perspective, supported by infrastructure spending and large capacity additions. While demand is expected to improve, pricing may take a little longer to recover, with Ray expecting meaningful price increases in the second half of FY27, not before that.
According to Motilal Oswal, India's cement sector appears to be approaching an earnings inflection point after an extended phase of estimate downgrades. The sector is expected to witness a meaningful recovery in profitability during the second half of FY27 as lower energy costs begin to flow through financials and construction activity gathers pace. While the first half of FY27 is expected to remain subdued due to the lagged impact of elevated fuel costs, the latter half is anticipated to show significant improvement. The sector's recovery trajectory is supported by improving demand fundamentals and easing input cost pressures, positioning it for sustained growth in the coming quarters.
Cement demand growth of around 7-8% year-on-year is expected in FY27, supported by sustained government spending on infrastructure and affordable housing. Higher capital expenditure by both central and state governments, particularly across roads, railways, urban infrastructure, and housing projects, is driving this demand momentum. Regionally, the North and Central markets have maintained healthy momentum, while demand in the East and West has improved following a slower start to the calendar year. The South remains relatively soft, though broader demand is expected to strengthen in the post-monsoon period. This regional variation reflects the uneven recovery across different markets, with northern and central regions showing more resilient demand patterns. As per Nirmal Bang, several cement companies have reported double-digit volume growth despite elections and extreme summer conditions, indicating that FY27 has begun on a strong footing.
The sharp correction in petcoke and coal prices following their spike during the West Asia crisis has significantly improved the sector's margin outlook. Fuel prices have declined by roughly 10-16% from recent peaks, reducing expected cost inflation and limiting the scope for further earnings downgrades. Although operating margins are likely to remain under pressure during the first half of FY27 due to the delayed impact of earlier fuel cost increases, profitability is expected to recover meaningfully in the latter half as lower energy costs coincide with stronger volumes and improved operating leverage. Management across major players expects near-term cost pressures from fuel, packaging, and logistics to remain manageable through mitigation measures such as fuel mix optimisation, supplier diversification, and long-term input contracts.
Despite an estimated 57 million tonnes per annum of grinding capacity additions during FY27, supply dynamics are expected to remain balanced. Capacity commissioning and ramp-up are likely to be staggered throughout the year, limiting effective supply growth and keeping industry capacity utilisation broadly stable. Pricing is expected to remain disciplined, with gradual and sustainable price increases rather than aggressive hikes. This balanced approach is anticipated to support the sector's recovery trajectory, with companies like UltraTech Cement and JK Cement implementing strategic pricing measures to offset margin pressures from elevated input costs. Ray noted that the usual pre-monsoon price hike did not materialise this year, but prices have remained stable after the goods and services tax (GST) rate cut.
The sector presents an improving medium-term outlook driven by infrastructure-led demand, moderating fuel costs, and stable industry utilisation. The combination of these factors is expected to restore earnings momentum after a challenging period. Valuations remain broadly aligned with long-term averages, suggesting that improving profitability and stronger earnings visibility could support a more favourable risk-reward profile for the sector over the coming quarters. Among individual companies, Nirmal Bang prefers Birla Corporation, JK Lakshmi Cement, Nuvoco Vistas, and JK Lakshmi Cement. While the analyst remains positive on UltraTech's business fundamentals, he believes its current valuations are relatively expensive and would prefer to wait for more clarity over the next few quarters. Companies like UltraTech Cement and JK Cement are well-positioned to capitalise on this recovery, with strong balance sheets, successful asset integration, and robust expansion pipelines supporting their long-term growth trajectories.
