Indian Cement Sector: Five things we learned from 1Q results

研报英文原文证据摘录

J P M O R G A N

Asia Pacific Equity Research

11 August 2026

Indian Cement Sector

Five things we learned from 1Q results

1Q results highlighted that 1) cement demand was stronger than initially expected at

c.9% YoY growth in volumes; 2) cement companies took sharp hikes in pricing with

prices now reaching levels last seen during the bull market of 2022-23; 3) we estimate

that Ambuja ceded 3% market share to other large players YoY; 4) most companies

expect further cost pressures in 2Q, which coincides with the seasonally lean period

for cement volumes; and 5) there were no new capacity announcements by major

companies during the quarter (vs. c.44 MTPA announced in 1H FY26), but even at the

current pace of additions, industry utilization is unlikely to improve. Pricing discipline

remains key for the industry's earnings. We prefer UTCEM.

Demand fared better than expected: YoY cement sales volumes held up

reasonably well across the top 11 companies, with their aggregate volumes

growing 9% YoY (2-year CAGR: 9%). Despite expectations of a softer quarter,

we think volumes may have been supported by 1) healthy central/state

government capex (up 24/6% YoY during 1Q), and 2) the delay in monsoons

which increased the number of days for construction activity.

Prices improved across the board: Most companies increased prices during

1Q by Rs10-15/bag as expected. Over the past three quarters, consistent hikes

by cement companies have pushed net realizations to FY23 levels. This shows

that cement companies have the ability to increase prices when required, if they

want to protect their blended EBITDA/MT.

Cost pressures remain: Most of the price hikes in 1Q were in response to

higher input costs that companies anticipated due to the start of the conflict in

the Middle East. All companies reported a significant increase in power and

fuel costs. Freight costs were surprisingly flattish. Other costs were higher

QoQ as most companies flagged higher costs for packing bags. Companies

flagged that they expect a further increase in costs in 2Q in the Rs80-140/MT

range. Leaner volumes in 2Q could result in lower operating leverage.

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