Stocks to buy: Cement sector set for steady growth in FY26; brokerages bullish on THESE four stocks

Cement stocks to buy: After a challenging start to FY25, the Indian cement sector rebounded strongly in the March quarter, setting the tone for a more stable and profitable FY26. Supported by firm pricing, cost optimisation, and strong demand recovery, companies across the board delivered better-than-expected results in Q4FY25. 

Sector-wide EBITDA per metric ton (EBITDA/mt) jumped over ₹300 sequentially to ₹1,055/mt, marking a clear recovery from the lows of 2QFY25. The industry closed FY25 with an installed capacity of around 655 million tonnes per annum (MTPA), reflecting a 4.8% year-on-year expansion. 

Major players like UltraTech Cement and JK Cement posted strong volume growth of 16.9% and 14.6% YoY, respectively, driven by both demand revival and contributions from newly acquired assets.

During the quarter, UltraTech Cement and Dalmia Bharat commissioned 6.3 mtpa and 2.9 mtpa of new capacity, respectively. Birla Corporation and Dalmia Bharat also announced fresh expansion plans of 6.2 mtpa and 6 mtpa. This capacity addition signals rising confidence in long-term demand trends, supported by increased government infrastructure spending and housing activity.

Management commentaries across top players point to a demand growth forecast of 6–7% in FY26. Several brokerages, however, estimate an even higher potential growth of 8–9%, citing tailwinds from urbanisation, rural housing, and commercial real estate.

A rebound in residential real estate, along with retail and office space expansion, is also expected to keep cement demand buoyant. Furthermore, pan-India cement prices have risen by approximately 4% in 1QFY26-to-date, led by sharp hikes in southern and eastern markets, which bodes well for regional profitability.

While the pricing environment remains healthy—with April 2025 witnessing sharp price hikes in the southern region—early onset of the monsoon could dampen momentum in the first quarter. Brokerages caution that the seasonal weakness could lead to near-term stock consolidation. However, underlying fundamentals remain intact, backed by improving utilization levels and a favorable cost environment, especially for power and fuel.

Brokerages stay bullish on sector outlook

Following Q4 results, brokerages have maintained a positive outlook on the cement sector. Systematix Institutional Equities noted that the industry exited FY25 on a strong note, with improving demand and partial price absorption in key markets like the East and North. 

Centrum Broking pointed to consolidation-led discipline and improving infrastructure and housing momentum as key growth drivers in FY26, projecting demand growth between 6% and 7.5%.

Axis Securities remains positive as long-term demand drivers are intact and expects cement demand to grow at a CAGR of 7%-8% over FY24-27E. It anticipates sector consolidation to benefit large players through economies of scale, supply chain efficiency, and better pricing in the long term. Despite ongoing capacity additions, it believes long-term cement demand will outpace supply.

UltraTech among top cement stock picks

Systematix Institutional Equities has picked UltraTech Cement, Ambuja Cements, and JK Cement as its top picks within its coverage universe, with price targets of ₹14,038, ₹649, and ₹5,863, respectively.

Centrum Broking also maintains a bullish stance and recommends UltraTech Cement, Ambuja Cement, and JK Cement, assigning target prices of ₹14,038, ₹649, and ₹5,863, respectively.

Axis Securities has listed UltraTech Cement (target price: ₹13,510), JK Cement ( ₹5,740), and Birla Corporation ( ₹1,560) as its top conviction ideas, emphasising the importance of monitoring price trends, fuel costs, and demand revival post-elections. The brokerage retained buy calls on these three counters.

JM Financial, too, has reiterated its preference for UltraTech Cement and JK Cement, pointing to expected demand growth, sustainable cost savings, and a gradual improvement in pricing that should support profitability in FY26.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.