Cement players raise prices in June, but MOFSL says sustenance still on the radar

Cement players hiked prices by Rs 8-10/bag across regions in June.

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26 Aug, 2025 12:21

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Cement players finally managed to hike prices by Rs 8-10 per bag across regions in June, albeit after several failed attempts. However, brokerage firm Motilal Oswal Financial Services still remains skeptical over its sustenance, given the onset of the monsoon in the next few weeks across the country.

In June, cement prices in the eastern, western, and central regions have increased by Rs 10 per bag, an around 3 percent month-on-month rise. Meanwhile, prices in the northern and southern markets have gone up by Rs 8-9 per bag, reflecting around a 2 percent month-on-month spike. As a result, the all-India average cement price has risen by about 3 percent month-on-month so far in June 2024.

Caution over these price hikes also arises from the fact that cement players had previously attempted to raise prices in April-May. However, a major part of those hikes was reversed in a couple of days amid sluggish demand.

"Cement prices were under pressure since the beginning of 2024 due to intense competition followed by a demand slowdown," MOFSL noted.

In the near term, MOFSL expects demand to be subdued due to the onset of the monsoon season. However, the brokerage projects it to rebound strongly in the second half of FY25, driven by the housing and infrastructure sectors. "We anticipate industry volume growth of approximately 5-6 percent year-on-year in the first half of FY25, followed by an 8-9 percent growth in the second half of FY25," MOFSL noted.

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Meanwhile, Modi 3.0's announcement to construct an additional 3 crore rural and urban houses under the Pradhan Mantri Awas Yojana (PMAY) is also seen as a positive development for the cement sector. "We believe this initiative is significantly positive for the cement industry as the government continues with its focus on affordable housing and development," MOFSL stated.

Going ahead, MOFSL also anticipates an improvement in cement demand momentum to be driven by the government's focus on affordable housing, sustained strong demand from the real estate sector, and a likely increase in industrial capital expenditures.

The BJP's 2024 manifesto emphasizes expanding the PM Awas Yojana, slum redevelopment, promoting affordable housing, and enhancing road networks, rail and metro connectivity, as well as constructing new airports are all considered key positives for cement players.

On that account, MOFSL believes that announcements in the forthcoming union budget will be key indicators for the improvement in cement demand momentum. Within the sector, the brokerage chose Ultratech Cement as its top pick in the large-cap space and Dalmia Bharat and JK Cement in the mid-cap segment.

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