INDIA CONSTRUCTION: CEMENT: Some tailwinds, few headwinds and valuation open selective upside; remain positive on ULTC and upgrade Dalmia to Buy

Research evidence excerpt

INDIA CONSTRUCTION: CEMENT: Some tailwinds, few headwinds and valuation open selective upside; remain positive on ULTC and upgrade Dalmia to Buy

Goldman Sachs India Construction: Cement

We incorporate the recent fall in energy prices, packaging costs and revised diesel pump

prices for our cement coverage. We MTM pet-coke and coal prices (lag impact due to

60-75 days inventory), diesel pump prices and packaging costs, resilient demand in 2Q

on the back of delayed monsoon and subdued 2H driven by lower rural consumption.

Update on 1Q so far:

Prices improved in Apr-26 across regions to offset the cost inflation; however, post

that, price hikes which were additionally attempted in May-26 have been rolled

back. Though realizations are up ~3-4% sequentially, this is lower than earlier

expectations. We expect no price hikes to be attempted in near term despite a delay

in monsoon. We now expect lower realization (2.5% vs earlier 3.5%) in FY27 on the

back of softening cost.

1QFY27 volumes: Volumes were strong in the first half of Apr-26. However, volumes

were subdued in the latter half of Apr-26 and May-26. There was an improvement in the

month of Jun-26 but that wasn’t substantial as historically seen. We expect the industry

to grow volumes mid single digits (~6%) yoy.

1Q results expectations: Pan India prices improved ~3% sequentially led by southern

and eastern. Ambuja consolidated should see the biggest recovery sequentially due to

reversal of certain costs, followed by Shree and Ultratech Cement. Better prices will

offset the cost inflation witnessed by the industry and we expect the companies under

our coverage to report profitability (EBITDA/t) largely in line with 4QFY26.

Medium-term view: Northern region, which has been the best-performing region in the