The amendment to the Mines and Minerals (Development and Regulation) Bill represents a positive development for the cement sector, particularly benefiting The Ramco Cements and Dalmia Bharat, which were impacted by higher royalty costs in Tamil Nadu. According to Rajesh Ravi, Senior VP-Institutional Research at HDFC Securities, the change removes uncertainty over other mineral-rich states imposing similar levies. Ramco Cements has been among the worst affected, with the royalty adding around ₹80-100 per tonne to its overall cost, while Dalmia Cement faced an impact of around ₹40 per tonne. Ravi noted that the amendment is "positive for the sector as a whole" and should increase the competitiveness of Ramco and Dalmia in the near term.
Despite the positive mining law development, HDFC Securities maintains a strong sell rating on Ramco Cements, citing multiple operational challenges. The company's margins have fallen to around ₹700-800 per tonne, and HDFC Securities remains bearish due to weak pricing in South India, slower capital expenditure, and balance-sheet concerns. These factors have weighed on Ramco's margin profile, with the company facing continued volatility in the southern cement market. The removal of royalty uncertainty provides some relief, but the underlying operational challenges persist.
JSW Cement's entry into north India appears to be progressing better than initially expected, with the company reporting around 55% utilisation in the April-June quarter of 2026 (Q1FY27) of its north India operations. According to Ravi, this utilisation level is commendable given that the company is entering a new market. JSW Cement typically takes four to five quarters to reach earnings before interest, taxes, depreciation and amortisation (EBITDA) break-even when entering a new geography, and the early utilisation suggests the north India expansion could reach break-even faster. The company's management guidance on profit contribution will remain important for future performance.
On UltraTech Cement, Ravi believes the proposed royalty payment is unlikely to have a meaningful operational impact. Even if UltraTech has to pay the maximum ₹225 crore annually, it would amount to roughly ₹10-12 per tonne and less than 1% of its EBITDA, given EBITDA of around ₹1,000-1,200 per tonne. "From that perspective, the impact is minimal," Ravi stated. This assessment supports UltraTech's position as a preferred stock in the sector.
For preferred stocks, Ravi remains positive on UltraTech Cement and JK Cement, citing consistent industry-leading volume growth, healthy margins and strong balance sheets despite ongoing capital expenditure. He is also positive on Ambuja Cements, but sees a need for the company to execute its delayed capex and recover margins over the next one to two quarters. If those improvements come through, Ravi believes Ambuja's relatively low valuation could leave room for significant upside. The key benefit of the mining law amendment is the removal of uncertainty over whether states such as Chhattisgarh, Madhya Pradesh, Karnataka and Maharashtra could introduce similar royalty measures, providing companies greater visibility on costs regardless of government changes at the centre or state level.
