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Early Monsoon Disrupted What Could Have Been a Strong Quarter

Cement: Volume & Realizations Driven Peformance

Q1FY26 Review: Cement companies under our coverage (11) reported volume growth of 8.9% YoY, and realization grew by INR 185/t YoY and INR 189/t QoQ. Revenue growth for our coverage companies came at 11.6% YoY, while total cost/t declined by 0.9% YoY. With support of better realization, volume increase, and cost decline, coupled with operating leverage benefits, resulted in a 28.3% YoY growth in EBITDA/t, expanded INR 225/t YoY, and 35/t QoQ. PAT growth for the sector companies under coverage came in at 65.4% YoY.

Forecast: For FY26, we forecast YoY volume/realisation growth of ~12/3.5%, cost/t decline of INR ~50/t. As a result, we expect EBITDA/t of INR ~980/t an expansion of INR ~180/t. Revenue/EBITDA/PAT growth of 17.0/40.4/25.2% YoY.

Stance: We continue to have a positive stance on the sector with BUY/ADD/REDUCE/SELL on 8/1/0/2 stocks respectively. NUVOCO, BCORP, JKL, and DALBHARA are our high conviction picks.

Building Materials: Tiles, Bathware, MDF Did Well, Pipes Disappointed

Q1FY26 Review: Companies under our coverage (4 Building Materials and 1 Steel Pipes) reported YoY growth across segments as follows: Pipes (Vol de-growth of 9%), Bathware (Rev growth of 4%), Tiles (Rev growth of 4.5%), Plywood & MDF (Rev growth of 1/12%), SAW Pipes (Rev de-growth of 1%). Revenue/EBITDA growth for our coverage stocks came in at (2.3)/5.4% YoY.

Forecast: We expect FY26E Revenue growth of 17/10/9/10/18% across Pipes, Bathware, Tiles, Plywood & MDF, SAW Pipes segments. We expect Revenue/EBITDA growth of 13/38% YoY for the companies under our coverage.

Stance: We maintain a positive stance on the sector across segments with BUY on 5 stocks. HINDWARE and MTLM (Greenply) are our high conviction picks.

Realty – Developers, Flexible Workspace & Construction

Developers: Delays in Launches and Completions Impacted Adversely

Q1FY26 Review: Companies under our coverage (3) reported pre-sales of INR 96Bn(-16.7%YoY,-26.4%QoQ), collections of INR 59.7Bn(+17% YoY, -35.2% QoQ).

Guidance: We expect FY26E pre-sales growth of INR 43,326Mn (+11% YoY) and FY26E Collections growth of 55,786 (21% YoY).

Stance: We maintain a positive stance with BUY on 2/2 stocks. SOBHA is our high conviction pick.

Flexible Workspace: Strong Quarter for Seat Addition

Q1FY26 Review: Companies under our coverage (2) reported seat addition of 64,460 (46% YoY and 5% QoQ). Revenue growth for rental/design & build came in at 58/40% YoY. Revenue/EBITDA/PAT growth came in at 54/82/205% YoY.

Forecast: We expect FY26E seat addition of 40,951 (+21% YoY) and Revenue / EBITDA / PAT growth 30/42/90% YoY.

Stance: We maintain a positive stance with BUY on 2/2 stocks. EFCIL is our high conviction pick.

Construction: Weak Performance Overall

Q1FY26 Review: PSP Projects reported Revenue de-growth of 17% YoY. Order inflow came in at INR 8.5Bn.

Forecast: We forecast FY26E Revenue/EBITDA growth of 15/34% YoY, EBITDA margin 8.3% (+120 bps YoY) and net order inflow of 11.1Bn.

Stance: We have a positive stance on the order flow.

Metals & Mining: Volume Mix Better Than Expectations

Q1FY26 Review: COAL reported YoY sales volume de-growth of 4%, but volume mix was better.

Forecast: We forecast FY26E headline volume growth 4%. We expect Revenue/EBITDA growth of 4/2% YoY.

Stance: We have a negative stance on COAL largely due to structural issues.

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