Jefferies sees profit turnaround for Indian cement sector in FY26, led by South India price recovery

Global brokerage Jefferies has projected a strong recovery in the profitability of India’s cement sector for FY26, driven by an early rebound in prices in South India starting from the first quarter. Jefferies highlighted Ultratech Cement, Shree Cement, and JK Cement as its top picks, citing their strong momentum in earnings recovery.

The sector already showed encouraging signs in Q4 FY25, with EBITDA growing 11% year-on-year and a sharp 67% rise sequentially, supported by firmer pricing and consistent volume growth.

Jefferies had previously added Ambuja Cements to its model portfolio, expecting further margin gains as competition eases across the industry.

Adding to the optimism, Systematix Research forecasted 6% to 7.5% demand growth for the Indian cement industry in FY26. The research noted that market discipline resulting from consolidation, combined with robust demand from infrastructure and housing sectors, is setting the stage for a more stable and profitable cycle for the industry.

Meanwhile, Nomura’s dealer channel checks confirmed positive pricing trends, especially in June 2025. Nationally, cement prices rose by ₹2 per bag, reaching an average of ₹358 per bag. The surge was primarily driven by a ₹19 per bag increase in South India, with Tamil Nadu and Kerala contributing most to this upswing since mid-May.

In contrast, other regions saw minor price corrections — ₹3 per bag decline in Central India, ₹5 in the West, and ₹2 in some parts of the South outside the key growth markets.

Overall, the combination of price recovery, demand growth, and improving market discipline points to a promising FY26 for the Indian cement sector.