Cement makers strive to repair realizations; can investor sentiment revive?

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Many listed cement manufacturers saw sales from the margin-accretive trade segment rise sequentially in the March quarter (Q4FY26).

Trade-segment cement is sold through networks of local dealers, hardware stores and retailers, usually in 50-kg bags. Non-trade cement is sold directly in bulk, mostly to the government or large institutions. The latter is a volume game, where companies tend to offer discounts for large purchases, resulting in lower margins than the trade segment.

Birla Corporation led the pack with a trade mix of around 79%, followed by Nuvoco Vistas Corporation and Ambuja Cements (plus ACC) at over 70% each.

It is also encouraging that the premiumization trend has continued. Premium cement offers superior strength and long-term durability, hence it is costlier. In Q4FY26, premium cement accounted for 36% of trade sales at Ambuja (plus ACC), 22% at Shree Cement and 24% at Dalmia Bharat. Ambuja Cements’ Q4FY26 premium cement volumes grew 22% year-on-year.

Dalmia Bharat’s management highlighted that it would continue to focus aggressively on premiumization in FY27 and has also launched a new premium product, Weather 365.

“Cement prices in the trade segment are typically higher by ₹25-30/bag than the non-trade segment, so increased trade sales and premiumization augur well for realizations,” said Nirransh Jain, analyst cement, durables & EMS, BNP Paribas.

That said, companies incur higher packaging and freight costs in the trade segment compared with non-trade, which continue to act as incremental cost headwinds in Q1FY27, Jain cautioned.

Meanwhile, in the aftermath of the West Asia war, the cost of imported petroleum coke, coal and polypropylene—used to manufacture sturdy cement bags—has risen sharply.

Against this backdrop, despite price hikes implemented in April and May to combat cost inflation, cement companies are bracing for an operating-margin hit in H1FY27.

Muted realizations growth amid chase for market share has soured investors sentiment towards cement stocks. Aggregate average blended (grey plus white cement) realisation/tonne rose by around 2% sequentially in Q4FY26 despite price hikes in both trade and non-trade segments, showed BNP analysis.

However, in the seasonally weak Q1 and Q2 quarters, price hikes tend to be rolled back.

So far in Q1FY27, trade cement prices have risen by ₹10-15 per bag in most regions compared with March exit levels, according to Kotak Institutional Equities. However, pan-India prices in June were flat month-on-month at ₹353 per 50-kg bag, as the arrival of the monsoon in some regions led to moderation in prices.

According to Centrum Broking, Q2FY27 is likely to witness a sharper margin contraction than Q1FY27.

Historically, the September quarter has been weak for the cement industry, but the current cycle appears more challenging given elevated fuel and freight costs, limited pricing power, maintenance shutdowns and negative operating leverage, said the Centrum report dated 12 June. It added that consensus earnings-growth estimates for FY27 and FY28 have already seen steep cuts.

Even if companies successfully navigate cost inflation, a wave of new supply additions in FY27 and FY28 could weigh on volume growth, utilizations and pricing discipline.

As a result, overall earnings visibility remains hazy.

Investors have already taken note. Shares of large cement makers are down 7-24% so far in 2026.

“Valuations for most companies within our coverage universe provide a limited margin of safety in the absence of meaningful short-term triggers,” said the Kotak report dated 18 June.

Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.<br><br>Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.<br><br>Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.<br><br>A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.<br><br>She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.

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