The cement sector is entering the June quarter earnings season. According to the latest brokerage report by JM Financial, cement volumes remained healthy during Q1FY27. However, higher operating costs are expected to weigh on profitability, even as companies report better revenue growth.
The brokerage house continues to see opportunities in selected cement companies and has retained UltraTech Cement as its preferred stock in the sector.
Stocks in focus: UltraTech JM Financial’s preferred pick
UltraTech Cement continues to be its top sectoral pick as the company is expected to outperform peers in terms of volume growth during the June quarter.
JM Financial said, “UltraTech Cement remains our top sectoral pick.”
The brokerage expects UltraTech, along with Shree Cement, JK Cement and JSW Cement, to report double-digit volume growth during the quarter, outperforming the broader industry.
According to the report, “Industry volume likely grew in high single digits YoY in Q1FY27.”
The brokerage estimates that companies under its coverage are likely to report volume growth of around 8% year-on-year, broadly in line with industry trends.
JM Financial on cement sector
| Company Name | Rating | Current Price (Rs ) | Target Price (Rs ) | Upside Potential |
| ACC | ADD | 1,338 | 1,500 | 12.10% |
| Ambuja Cements | BUY | 441 | 515 | 16.80% |
| Birla Corporation | ADD | 976 | 1,215 | 24.50% |
| Dalmia Bharat | ADD | 1,773 | 2,175 | 22.70% |
| JK Cement | ADD | 5,471 | 6,000 | 9.70% |
| JSW Cement | BUY | 136 | 155 | 14.00% |
| Ramco Cements | REDUCE | 938 | 940 | 0.20% |
| Shree Cement | ADD | 26,630 | 28,400 | 6.60% |
| Star Cement | BUY | 208 | 295 | 41.80% |
| UltraTech Cement | BUY | 11,661 | 13,850 | 18.80% |
Demand improves, but pricing remains under watch
According to JM Financial, cement demand remained healthy during the quarter, while prices also improved across the country.
The brokerage noted, “Pan-India average cement prices rose ~3% QoQ (~Rs 12/bag) with a broad-based price hike across regions.”
However, it believes pricing power could weaken in the coming months as the industry enters its seasonally slower period.
JM Financial in its report noted that the demand may remain relatively soft in the near term, limiting companies’ ability to implement further price increases despite improving volumes.
Higher costs may weigh on earnings
JM Financial expects higher operating costs to put pressure on profitability during the June quarter.
JM Financial in its report noted, “We estimate EBITDA for our cement coverage companies to decline ~10% QoQ/1% YoY.”
The brokerage expects profitability per tonne to remain broadly stable during the June quarter as higher selling prices offset a large part of the increase in production costs.
It added, “Coverage companies’ profitability [is] likely to decline marginally sequentially to ~Rs 1,057/trillion in Q1FY27E.”
Relief from fuel costs may take time
One positive development for cement manufacturers has been the recent decline in petcoke prices, an important fuel used in cement production.
However, JM Financial believes the benefit will not be visible immediately.
The brokerage said, “The recent decline in petcoke prices (~$25/trillion in the past month to ~$132/trillion) implies cost savings of ~Rs 100/trillion, [but] it is expected to largely reflect in Q3FY27E.”
At the same time, the brokerage cautioned that companies could face another challenging quarter because of higher input costs.
According to the report, “Peak cost inflation (Rs 350–400/trillion) coinciding with a seasonally weak quarter could sharply dent profitability by over ~Rs 200/trillion sequentially in Q2FY27E.”
What investors should watch
As per the brokerage house, the cement sector continues to benefit from improving demand and higher sales volumes, but earnings will remain closely linked to input costs and pricing discipline.
The brokerage believes investors should closely monitor quarterly earnings, operating margins, fuel cost trends and pricing across regions.
Disclaimer: The investment views, stock preferences, and sector estimations mentioned in this report are based on assessments by a leading brokerage house and do not constitute direct financial advice or buy/sell recommendations. Readers should consult a SEBI-registered financial advisor before making any investment decisions in equity instruments. This disclaimer has been generated using AI to support user well-being and responsible content consumption.