It’s an irony that just can’t be ignored – construction activity in most parts (barring the south which has winter rains) of the country has resumed and will gradually reach peak levels, following the end of the monsoon season. However, cement stocks on Dalal Street have shown a distinct weak trend since hitting a 52-week high in September, given the announcement of GST cuts on cement.
For instance, UltraTech Cement, an all-India player and the largest in this sector, was down 0.25% in early Monday trade to Rs 11,570 and it has corrected nearly 11.5% from its 52-week high of Rs 13,101.8 that was reached on 4 September, 2025.
Similarly, other leading players like Dalmia Bharat gained 0.5% to Rs 1,999 in early Monday trade, and has weakened nearly 20% from its 52-week high of Rs 2,496 that was reached on 17 September, 2025.
And Shree Cement was up 0.6% at Rs 26,219 in early Monday trade, and has dropped nearly 19.5% from its 52-week high of Rs 32,508 that was reached on 22 July, 2025.
The supply glut: 40 million tonnes of new capacity
Cement prices have come down with the GST on this key commodity for the construction sector at 18% from the earlier 26%. In addition, leading brokerage house reports point out to nearly 40 million tonnes of additional cement capacity coming on stream in different parts of the country over the next few months at a time when demand has been sluggish. Cement capacity on an all-India basis was estimated at 668 million tonnes at the end of FY25, and that was projected reach 690 million tonnes by the end of June 2025 quarter.
In peak construction season, despite all the efforts by the RBI and the central government to boost economic activity in the country via various policy measures, cement prices have shown signs of weakness. For instance, in the eastern region, average cement prices are at nearly Rs 340 per 50 kg bag vis-a-vis Rs 350 per bag in April 2025. Recent state elections in Bihar had led to curtailed cement demand and a pick-up in construction activity is still awaited.
In the western region, average cement prices have been reported at about Rs 355 per bag vis-a-vis Rs 360 per bag levels in April 2025. However, demand in the Navi Mumbai region is strong, given the development of infrastructure related to the new airport in this region.
And in the northern region, with Delhi reeling under the pollution crisis and construction ban on several days by the local administration, cement prices in this region are reported to have averaged Rs 360-365 per bag vis-a-vis Rs 370-Rs 375 in April 2025.
For UltraTech , an all-India player, cement realisations were estimated at Rs 5,792 per tonne or Rs 290 per bag in the September 2025 quarter, a growth of 12% on a y-o-y basis.
The margin safety net: Falling coal & petcoke prices
To the relief of cement companies, some input prices have shown signs of weakness – international spot coal prices are currently at $90 per tonne levels vis-a-vis $105 per tonne levels in January 2025. Weakness in coal prices is attributed to increased international supply from Indonesia and neighbouring countries. And spot international petcoke prices are at $110 per tonne levels vis-a-vis $120 per tonne in March 2025, and this is attributed to sluggish demand from China’s industrial sector.
For UltraTech Cement, its standalone power and fuel expenses were Rs 3,866.5 crore in the September 2025 quarter, or 21.6% of its revenue from operations in the quarter under review.
Valuation reality check: Are cement stocks cheap yet?
UltraTech Cement trades at a valuation metric, enterprise value per tonne, at nearly $210 per tonne vis-a-vis $ 235 per tonne when it had reached its 52-week high on 4 September 2025. The Mumbai-based company has highlighted its capacity of 192.3 million tonnes on 18 October, 2025.
Meanwhile, Dalmia Bharat trades at $ 99 per tonne levels vis-a-vis $ 120 per tonne on 17 September, 2025, when it had reached its 52-week high. The New Delhi-based company in its investor presentation for September 2025 quarter had highlighted a capacity of 49.5 million tonnes.
And Shree Cement trades at a valuation of nearly $ 170 per tonne levels vis-a-vis $ 210 per tonne on 22 July, 2025, when it had reached its 52-week high. Shree Cement’s capacity was nearly 62.8 million tonnes at the end of the June 2025 quarter.
Investors on Dalal Street
UltraTech trades at a standalone P/E of 46.5 times, according to Screener.in. It has a return on equity (ROE) of 9.7% in the current financial year, according to Screener.in.
Meanwhile, Shree Cement trades at a standalone P/E of more than 55 times, and it has a ROE of 5.7% in the current financial year.
And Dalmia Bharat trades at a consolidated P/E of more than 33 times, and it has a ROE of 4.2%.
Clearly, leading cement stocks have factored in the growth opportunities over the next few quarters.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family do not hold the stocks discussed in this article.
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