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1QFY26 Preview: Price-led margin revival

We estimate that the average EBITDA/tn for cement companies under our coverage witnessed a moderate sequential recovery (INR 56/tn) in 1QFY26, supported by QoQ improvement in realisation, partially offset by operating de-leverage. On a YoY basis, however, EBITDA/tn is expected to register a sharp increase of >INR 250/tn, driven by improved pricing and a lower volume base. Consequently, the aggregate EBITDA of coverage universe is likely to grow by >40% YoY. Industry volume is estimated to have grown in low single digits YoY in 1QFY26; coverage companies are expected to have outpaced this growth, aided by acquisition-led expansion— particularly by UltraTech and the Adani Group. Ramco Cements and Dalmia Bharat are likely to report the highest improvement in unitary EBITDA, benefiting from stronger pricing in the South and East regions.In 1QFY26, pan-India average cement prices rose ~3% QoQ (~5% YoY), led by a ~9% increase in the South and ~5–6% in the East, with other regions seeing flat to marginal declines. Industry players appear to have attempted a further price hike of INR 10–15/bag across regions in the first week of Jul’25. We believe this attempt may help limit any material price correction during the monsoon. Our top picks are UltraTech Cement and JK Cement

* Volume growth of coverage universe to outpace industry in 1QFY26 owing to acquisitions: We estimate that industry-wide cement demand grew in low single digits YoY in 1QFY26. However, volumes for companies under our coverage are expected to increase by ~11% YoY (~6% on a like-to-like basis). This outperformance is largely attributable to acquisition-led growth, particularly for Ambuja Cements and UltraTech Cement, which are expected to report YoY volume growth of ~20% and ~18% (~6% like-to-like), respectively. Notably, our estimates for Ambuja factor in the consolidation of Orient Cement for approximately 65–70 days in 1Q. JK Cement and Star Cement are also likely to deliver double-digit YoY volume growth, while Birla Corp is expected to grow at ~9% YoY. On the contrary, Dalmia Bharat, Ramco Cements, and Shree Cement are the only names within our coverage anticipated to report volume contraction in 1QFY26.

* Pan-India cement prices rise ~3% QoQ in 1QFY26: Based on our channel checks, pan-India average cement prices increased by ~3% QoQ (~5% YoY, first positive YoY pricing trend in the past 5 quarters) in 1QFY26. The sequential improvement was primarily driven by a sharp ~9% increase in the South and ~5–6% in the East, while other regions saw broadly flat to marginally lower prices. Over a 2-year period, the price CAGR remains modest at just 1%. We note that industry players appear to have attempted an additional price hike of INR 10–15/bag across regions in the first week of Jul25. This pricing action could help mitigate any significant price corrections typically seen during the monsoon.

* Industry profitability to improve sequentially/ sharply YoY in 1QFY26 led by realisation: Ramco and Dalmia are likely to report the strongest improvement in profitability, benefiting from substantial price hikes in the South, which should more than offset the impact of increased limestone royalty in Tamil Nadu. We estimate UltraTech's EBITDA/tn at INR 1,195. Shree Cement is expected to lead the industry with margins > INR 1,400/tn, supported by continued efforts to enhance pricing power. JK Cement should also report healthy profitability (>INR 1,200/tn), aided by strong volume growth. Ambuja is expected to see a marginal sequential improvement to INR 1,030/tn. Meanwhile, Birla Corp and Star Cement may report QoQ declines following a strong 4QFY25.

* Companies to watch out in 1QFY26: Ramco Cements and Dalmia Bharat

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