Cement sector to see tepid Q2FY26 volumes, price gains offer relief: Nuvama
The report added that while operating deleverage and higher expenses may pressure margins, softening fuel prices and ongoing cost-efficiency measures by industry players are likely to cushion the impact.
"We believe Q2FY26 will witness subdued volume growth on account of a seasonally weak quarter; however, improving realisations have brought cheer to the industry. The sequential dip in realisation and other expenses being higher on account of operating deleverage shall be somewhat negated by softening fuel prices (lag effect) and various cost efficiency measures undertaken by players," the report added.
The cement industry showed signs of recovery in the first quarter of FY26, with 15 major companies reporting around 7 per cent growth in sales volumes compared to last year (though volumes were down 11 per cent from the previous quarter). This growth was mainly driven by increased government spending on infrastructure.
Ambuja Cement (including its recent acquisitions) and JK Cement led the pack with over 14 per cent volume growth year-on-year.
Prices also improved in southern and eastern regions, pushing up the average selling price by about 5 per cent compared to the previous quarter, even though it was slightly lower than the same period last year. Meanwhile, raw material costs dropped by 5 per cent quarter-on-quarter and 15 per cent year-on-year, mainly due to better inventory management.
As a result, the industry's profit per tonne (EBITDA/t) improved by 10 per cent quarter-on-quarter and 26 per cent year-on-year, reaching ₹ 1,140 per tonne.
Looking ahead, the report added that the monsoon season (Q2FY26) is typically a slow period for construction, so sales may dip.
The report further added that the falling fuel costs are expected to help maintain profitability.
In August current year, cement prices remained flat compared to the previous month but were stronger on a year-on-year basis.
The monsoon season slowed down construction activity, particularly in rural areas and infrastructure projects, leading to weaker offtake and limiting companies' ability to raise or sustain prices.
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