Jefferies sees cement sector turnaround in FY26 on South-led price recovery

Brokerages expect the cement sector to rebound in FY26

Global brokerage Jefferies expects a turnaround in the Indian cement sector's profitability in FY26, led by a pricing recovery in the southern region beginning Q1. The firm has identified Ultratech Cement, Shree Cement, and JK Cement as its top picks, citing strong earnings recovery momentum.

According to Jefferies, the cement universe delivered a solid rebound in the March quarter (Q4 FY25), with EBITDA growing 11 percent year-on-year and 67 percent sequentially. This recovery was largely driven by firming prices and steady volume growth.

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Jefferies had earlier included Ambuja Cements in its model portfolio, betting on improving margins amid moderating competitive intensity across the industry.

Further supporting the bullish view, Systematix Research projected demand growth of 6 to 7.5 percent for the cement industry in FY26. The report noted that consolidation-led discipline, combined with robust infrastructure and housing demand, is steering the industry into a more stable and profit-friendly cycle.

On-the-ground checks by Nomura provide additional validation. According to the brokerage’s dealer channel checks, the Indian cement market witnessed notable price hikes in June 2025, particularly in South India, which has played a key role in lifting the national average.

As of early June, the pan-India average cement price rose by Rs 2 per bag to Rs 358. This increase was primarily led by a Rs 19 per bag hike in South India, with Tamil Nadu and Kerala driving the surge post mid-May. In contrast, minor price corrections were seen in other regions: down Rs 3 per bag in Central India, Rs 5 in the West, and Rs 2 in parts of the South outside the key spike zones.

With pricing discipline returning, demand expected to remain buoyant, and competitive pressures easing, analysts see a positive risk-reward setup for the sector heading into FY26.

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