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Demand recovery seen; prices remained weak sequentially in 3Q

* We estimate our cement coverage universe (incl. GRASIM) to post ~19%/42%/ 65% YoY growth in revenue/EBITDA/PAT in 3QFY26. Aggregate cement volume is likely to grow ~17% YoY to 108mt, aided by inorganic growth. However, on a like-to-like basis, volume growth is estimated at ~10% YoY. Blended realization is estimated to grow ~1% YoY (down ~2% QoQ) to INR5,359/t. We estimate EBITDA/t to rise ~21% YoY (down ~1% QoQ) to INR890. Average EBITDA margin (ex-GRASIM) is estimated to expand 2.7pp YoY (flat QoQ) to ~17%.

* Cement prices were under pressure in 3QFY26 and declined across regions, with higher correction seen in East and South regions, followed by West, North and Central regions. The non-trade price corrected sharply after GST rate cut, while the trade price was relatively steady. This also led to a higher gap between trade and non-trade prices. However, after a gradual recovery in cement demand over Nov-Dec’25, the price hike attempt in non-trade segment has been effective in select markets (North and South). Moreover, cement demand was initially weak due to the festive season and labor shortages. However, demand picked up at Nov’25 end and remained strong during Dec’25. Non-trade demand witnessed a strong pickup in the South and West regions amid higher government spending. In North and Central regions, demand uptick was still muted. We estimate industry volume growth in high single digits YoY in 3QFY26. Average grinding capacity utilization (on expanded capacity) is estimated at ~77% vs. ~77%/74% in 3QFY25/2QFY26.

* GRASIM’s revenue is estimated to increase ~20% YoY. VSF volume is estimated to inch up ~1% YoY and realization is likely to increase ~6%. Chemical volume is likely to grow ~2% YoY and realization may increase ~5%. Revenue from highgrowth businesses (Opus and Birla Pivot) may rise ~3% QoQ to INR27.2b (up ~71% YoY). Overall EBITDA is estimated to grow ~44% YoY to INR3.9b, and OPM is likely to improve 70bp YoY to ~4%. GRASIM is estimated to report a net loss of INR1.3b vs. a net loss of INR1.7b in 3QFY25.

Opex/t down ~2% QoQ, offsetting the impact of weak realization

* Cement volume growth for our coverage companies is estimated at ~17% YoY in 3QFY26, aided by inorganic growth. However, volume growth on a like-to-like basis is estimated at ~10% YoY. JKCE volume is estimated to grow ~14% YoY. We estimate volume growth of ~21% YoY for UTCEM (including ICEM and Kesoram cement volume). However, on a like-to-like basis, UTCEM’s volume growth is estimated at ~13% YoY. ACEM’s consol. volume may grow ~13% YoY (incl. Penna Cement and Orient Cement volumes), while on a like-to-like basis, it is likely to grow ~5% YoY. Volume growth is estimated at ~12% YoY for ACC/ICEM, followed by ~9% for DALBHARA/JSWC, ~6% for BCORP/JKLC/SRCM and ~5% for TRCL.

* Average opex/t for our coverage universe is estimated to decline ~2% YoY/QoQ (each), led by lower freight cost/employee expenses/other expenses per ton, whereas variable cost/t is estimated to remain flat YoY. Average imported petcoke (US) price was up ~19% YoY/5% QoQ, while average imported coal (South Africa) price was down ~22% YoY/5% QoQ. The spot imported coal (South Africa) price at USD87/t inched up ~1% vs. 3QFY26 average, while spot imported petcoke (US) price at USD111/t fell ~4% vs. 3QFY26 average.

* We estimate aggregate EBITDA/t of our cement coverage universe to increase ~21% YoY to INR890 (down ~1% QoQ). We estimate EBITDA/t of INR1,077 for SRCM (the highest in our coverage universe), INR1,009 for UTCEM, INR996 for JKCE and INR953 for ACEM. EBITDA/t is estimated to be in the range of INR620- 850 for the remaining players (ACC/BCORP/DALBHARA/JKLC/TRCL/JSWC), except for ICEM, which should post INR251/t.

* We estimate ACEM to report EBITDA growth of ~100% YoY, albeit on a low base, followed by ACC at ~59% and UTCEM/BCORP/JKLC at ~28-29%. EBITDA growth for DALBHARA is estimated at ~20% YoY, JKCE/JSWC/TRCL at ~12-15% and SRCM at ~6%. ICEM is estimated to report EBITDA of INR587m, compared to the operating loss of INR1.9b in 3QFY25.

Sector outlook and recommendation

* We estimate demand to remain healthy in 4QFY26 given the peak construction period. Further, demand improvement could lead to price hike announcements as well in the near term. However, a strong pipeline of capacity addition in the near to medium term (expect capacity addition of ~150-160mtpa till FY28 end) could restrict a sustainable material price hike in the medium term.

* Given expected muted growth in realization amid aggressive capacity addition, we have cut our EBITDA estimates (aggregate) for cement coverage companies by ~2%/4%/4% for FY26/FY27/FY28. Accordingly, we cut our PAT estimates by ~3%/7%/9% owing to higher leverage. We prefer UTCEM in the large-cap space and JKCE and DALBHARA in the mid-cap space.

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