Motilal Oswal sees cement demand to rebound from mid-April; picks Ultratech, JK Cement

Analysts expect price hikes to alleviate concern of lower margin for past few quarters

Cement demand displayed mixed trends over the past month, though dealers anticipate an improvement starting mid-April in India, driven by increased labour availability and a likely rise in demand from government-led infrastructure projects, according to analysts at Motilal Oswal in their latest channel checks report.

"Cement demand witnessed mixed trends, with a strong uptick in the South and Bihar markets, whereas demand was weak in the rest of the country. Dealers expect demand should improve from mid-April 2025 in the rest part of the country, with the increase in labor availability, an expected surge in demand from government-led infra projects, and consistently strong demand from real estate segment," they stated.

Motilal Oswal’s channel checks highlighted that the cement industry announced price hikes in April 2025. As a result, the average price increased by Rs 40/bag month-on-month in the South and Rs 20/bag month-on-month in the East. In the North, West, and Central regions, the average increase ranged between Rs 8–15/bag.

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"The price hikes should alleviate the concern of lower margin for the past few quarters. We estimate that the cement spreads in April 2025 should be at a 17-month high, mainly led by price hikes," they added.

In their Q4FY25 earnings preview, analysts expect sequential profitability to improve, supported by the sustained price hike from December 2024, positive operating leverage, and more favourable fuel prices. However, EBITDA per tonne is still projected to be lower on a year-on-year basis, as the recent price hikes were not sufficient to fully recover from the earlier fall in cement prices.

"While we are structurally positive on the sector, we prefer players with a balanced geographic mix, higher capacity utilisation, and a strong track record of capacity expansion and successful integration," they noted, citing a preference for Ultratech Cement among largecaps and JK Cement within the midcaps.