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Informist, Friday, Jun 6, 2025

MUMBAI - Stocks of cement companies are likely to move in a range next week as the price hikes undertaken in April are seeing a reversal due to monsoon and competitive pressures, analysts said. Demand is likely to remain weak in the short term and should improve later in the year. Investors should expect a range-bound performance by cement stocks in the coming weeks and focus on companies with strong fundamentals and cost control measures, analysts said.

According to JM Financial Services, there was a solid finish to 2024-25 (Apr-Mar), where earnings before interest, tax, depreciation, and amortisation across major companies surged 12% on year and 66% sequentially. Gains were driven by better realisations and improved cost efficiencies.

Demand in May initially showed an uptick but fizzled out soon partly due to India-Pakistan border tensions in the north and weather disruptions. In cities like Delhi and Jaipur, prices rose INR 8–10 per bag, supported by post-harvest rural investments, though dealers remained cautious about further hikes, said JM Financial Services.

Informist had reported earlier this week that dealers and industry manufacturers had reduced prices by INR 10–30 per 50 kg bag in Tamil Nadu and INR 10–20 in Andhra Pradesh and Telangana, aimed at countering subdued demand and intense competition. Companies such as UltraTech, India Cements, and JK Cement were involved in this price correction, with volume-pushing offers seen in Chennai, reported JM Financial.

According to JM Financial, western and central India markets were also under pressure. Prices stayed flat in Mumbai due to early monsoon rains and delays in government projects. Cities such as Lucknow and Bhopal suffered labour shortages and logistical challenges from local festivities, high humidity and heat, resulting in price drops of INR 5 per bag. Given these issues, dealers expect no price hikes in June.

Despite these near-term pressures, underlying sector fundamentals are strengthening. According to Nomura, cement industry

spreads--a critical early indicator of EBITDA per tonne--are seen improving significantly in 2025-26 (Apr-Mar). Average spreads rose to INR 2,652 per tonne, up INR 171 per tonne sequentially, reflecting a 3% increase in trade prices and a marginal INR 6 per tonne decline in fuel costs.

Looking forward, analysts from both JM Financial and Nuvama remain cautiously optimistic. They expect subdued volume growth in the first quarter of the current financial year due to monsoon effects and geopolitical headwinds, but anticipate a recovery in second half of FY26, supported by government infrastructure spend and rural demand revival.

Nomura has maintained its ratings for the cement sector companies. The brokerage has 'buy' rating for Ambuja Cements, Ultratech Cement, Shree Cement, and Ramco Cements. It has maintained 'reduce' rating for Dalmia Bharat, ACC, and Nuvoco.   

TOP HEADLINES
* Cement cos cut prices up to INR 30/50 kg bag in southern states, say dealers
* Dalmia Bharat board approves raising up to INR 40 bln via securities

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Ishaan Sharma
Edited by Vandana Hingorani

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