Cement stocks face a cost squeeze; UltraTech, JK Cement and JSW Cement top 3 Motilal Oswal picks; 5 more with upsides
1/10
Cement demand is strong, but profits are taking a hit
Motilal Oswal Financial Services says weak price realisation and rising costs may outstrip steady demand in the cement sector. The brokerage describes 2QFY27 (July-September 2026) as another weak quarter, with higher input costs and muted pricing more than offsetting healthy volumes.
It rates 12 cement stocks: 8 Buy, 3 Neutral and 1 Sell. Its top picks are UltraTech Cement, JK Cement and JSW Cement, and it also likes Grasim.
These slides cover what is hurting the sector, what could help, and which stocks the brokerage prefers.
It rates 12 cement stocks: 8 Buy, 3 Neutral and 1 Sell. Its top picks are UltraTech Cement, JK Cement and JSW Cement, and it also likes Grasim.
These slides cover what is hurting the sector, what could help, and which stocks the brokerage prefers.
2/10
Demand is strong. Profits are not
Motilal Oswal expects its cement coverage universe to report the following for 2QFY27:
*Revenue: up about 11% year on year
*EBITDA: down about 8% year on year
*Volume: up about 7% to 106 million tonnes
*Blended realisation: up about 1% year on year to INR5,503 per tonne, but down about 1% from the previous quarter
*EBITDA per tonne: down about 18% year on year to INR745
*Operating profit margin: down 2.5 percentage points year on year to about 12%
The pattern is clear. Companies sold more cement, but competition kept prices low, so the benefit of healthy volumes never reached profits.
*Revenue: up about 11% year on year
*EBITDA: down about 8% year on year
*Volume: up about 7% to 106 million tonnes
*Blended realisation: up about 1% year on year to INR5,503 per tonne, but down about 1% from the previous quarter
*EBITDA per tonne: down about 18% year on year to INR745
*Operating profit margin: down 2.5 percentage points year on year to about 12%
The pattern is clear. Companies sold more cement, but competition kept prices low, so the benefit of healthy volumes never reached profits.
3/10
Fuel prices are the biggest overhang
Costs are rising faster than prices. Motilal Oswal estimates:
*Average variable cost per tonne up about 6% year on year and 5% on the quarter, because companies used higher-cost fuel inventory
*Average operating cost per tonne up about 5% year on year and 3% on the quarter
Fuel prices have surged. Both imported coal and petcoke rose about 12-13% month on month in September 2026, and spot prices are trending above March-April 2026 levels. The brokerage calls continued elevated fuel prices a key overhang on earnings.
Companies tried raising prices during the quarter, but seasonality and tough competition meant the hikes didn’t hold. Non-trade prices fell further, by INR15-20 per bag in select East and Central markets. The all-India average trade price stayed largely flat on the quarter.
*Average variable cost per tonne up about 6% year on year and 5% on the quarter, because companies used higher-cost fuel inventory
*Average operating cost per tonne up about 5% year on year and 3% on the quarter
Fuel prices have surged. Both imported coal and petcoke rose about 12-13% month on month in September 2026, and spot prices are trending above March-April 2026 levels. The brokerage calls continued elevated fuel prices a key overhang on earnings.
Companies tried raising prices during the quarter, but seasonality and tough competition meant the hikes didn’t hold. Non-trade prices fell further, by INR15-20 per bag in select East and Central markets. The all-India average trade price stayed largely flat on the quarter.
4/10
Where cement demand is hot, and where it isn’t
Industry volume is estimated to have grown at a high-single-digit rate year on year, but regions differed:
Strong: North, South and parts of the West (Mumbai and South Maharashtra)
Muted: East, Central and parts of the West (Vidarbha and Gujarat)
The brokerage blames uneven rainfall and regional problems, including subdued government spending and liquidity and labour issues.
Supply is also rising. Motilal Oswal estimates about 55 million tonnes per annum of new cement capacity in FY27, with about 22 million tonnes per annum already commissioned in the first half. More supply makes it harder for companies to raise prices.
Strong: North, South and parts of the West (Mumbai and South Maharashtra)
Muted: East, Central and parts of the West (Vidarbha and Gujarat)
The brokerage blames uneven rainfall and regional problems, including subdued government spending and liquidity and labour issues.
Supply is also rising. Motilal Oswal estimates about 55 million tonnes per annum of new cement capacity in FY27, with about 22 million tonnes per annum already commissioned in the first half. More supply makes it harder for companies to raise prices.
5/10
Price hikes are coming. Will they stick?
Industry profitability dipped about INR220 per tonne on the quarter because of high input costs, negative operating leverage and muted pricing. Motilal Oswal has cut its cement universe’s EBITDA estimates by about 6% for FY27 and 5% for FY28, and its profit estimates by about 9% for both years.
There are signs of relief:
*Players announced price hikes of INR5-10 per bag in a few markets in the last week of September 2026
*More hikes are expected across regions in early October 2026
*Over the past two years, the second half has brought strong demand on higher government capex, and the brokerage expects a post-monsoon recovery to support prices
The question is whether hikes will last, given new capacity and competition. Cement stocks have corrected in recent months. Motilal Oswal says valuations are off their highs, but sustained price improvement is needed for a re-rating.
There are signs of relief:
*Players announced price hikes of INR5-10 per bag in a few markets in the last week of September 2026
*More hikes are expected across regions in early October 2026
*Over the past two years, the second half has brought strong demand on higher government capex, and the brokerage expects a post-monsoon recovery to support prices
The question is whether hikes will last, given new capacity and competition. Cement stocks have corrected in recent months. Motilal Oswal says valuations are off their highs, but sustained price improvement is needed for a re-rating.
6/10
Buy: The brokerage’s top 3 cement picks
UltraTech Cement (CMP INR10,799 · Target INR13,220), +22%
Volume is expected to rise about 11% and realisation about 1%. EBITDA per tonne is estimated at INR950, against INR914 a year ago. Variable cost per tonne is expected to stay flat, and adjusted profit is estimated to rise 19%. It commissioned 4.6 million tonnes per annum of grinding capacity.
JK Cement (CMP INR4,952 · Target INR5,960), +20%
Volume is expected to grow about 20% and realisation 2%. EBITDA is estimated up about 12% and adjusted profit up about 7%. EBITDA per tonne is estimated at INR830, against INR889 a year ago. It commissioned a 0.6 million tonne wall putty plant in Rajasthan.
JSW Cement (CMP INR111 · Target INR140), +26%
Sales volume is expected to jump 18% and realisation per tonne about 7%. EBITDA per tonne is estimated at INR766, against INR860 a year ago, with variable cost per tonne up about 21%. Adjusted profit is estimated down about 3% to INR835 million.
Volume is expected to rise about 11% and realisation about 1%. EBITDA per tonne is estimated at INR950, against INR914 a year ago. Variable cost per tonne is expected to stay flat, and adjusted profit is estimated to rise 19%. It commissioned 4.6 million tonnes per annum of grinding capacity.
JK Cement (CMP INR4,952 · Target INR5,960), +20%
Volume is expected to grow about 20% and realisation 2%. EBITDA is estimated up about 12% and adjusted profit up about 7%. EBITDA per tonne is estimated at INR830, against INR889 a year ago. It commissioned a 0.6 million tonne wall putty plant in Rajasthan.
JSW Cement (CMP INR111 · Target INR140), +26%
Sales volume is expected to jump 18% and realisation per tonne about 7%. EBITDA per tonne is estimated at INR766, against INR860 a year ago, with variable cost per tonne up about 21%. Adjusted profit is estimated down about 3% to INR835 million.
7/10
Buy: 5 more cement stocks with upside
JK Lakshmi (CMP INR477 · Target INR650), +36%. Volume up 6%, realisation down about 4%. EBITDA per tonne estimated at INR490, against INR733 a year ago. Adjusted profit seen down about 67% to INR271 million.
Birla Corporation (CMP INR830 · Target INR1,100), +33%. Volume up about 4%, realisation flat. EBITDA per tonne estimated at INR483, against INR717 a year ago. EBITDA seen down about 30%, and adjusted profit down about 72% to INR253 million.
Ambuja Cements (CMP INR363 · Target INR470), +29%. Volume up about 2%, realisation up about 2%. EBITDA per tonne estimated at INR701, against INR1,042 a year ago. Adjusted profit seen down about 73% to INR1.5 billion.
Grasim Industries (CMP INR2,972 · Target INR3,800), +28%. A diversified player the brokerage likes for its VSF recovery. VSF revenue is expected up 18% and VSF EBITDA up about 93%. Standalone revenue is seen up about 26% and EBITDA up about 83% to INR6.7 billion. Adjusted profit is estimated at INR30.8 billion, helped by higher other income, including a special dividend from UltraTech.
Dalmia Bharat (CMP INR1,681 · Target INR2,010), +20%. Volume up about 5%, realisation up about 1%. EBITDA per tonne estimated at INR753, against INR1,009 a year ago. Adjusted profit seen down about 81% to INR439 million.
Birla Corporation (CMP INR830 · Target INR1,100), +33%. Volume up about 4%, realisation flat. EBITDA per tonne estimated at INR483, against INR717 a year ago. EBITDA seen down about 30%, and adjusted profit down about 72% to INR253 million.
Ambuja Cements (CMP INR363 · Target INR470), +29%. Volume up about 2%, realisation up about 2%. EBITDA per tonne estimated at INR701, against INR1,042 a year ago. Adjusted profit seen down about 73% to INR1.5 billion.
Grasim Industries (CMP INR2,972 · Target INR3,800), +28%. A diversified player the brokerage likes for its VSF recovery. VSF revenue is expected up 18% and VSF EBITDA up about 93%. Standalone revenue is seen up about 26% and EBITDA up about 83% to INR6.7 billion. Adjusted profit is estimated at INR30.8 billion, helped by higher other income, including a special dividend from UltraTech.
Dalmia Bharat (CMP INR1,681 · Target INR2,010), +20%. Volume up about 5%, realisation up about 1%. EBITDA per tonne estimated at INR753, against INR1,009 a year ago. Adjusted profit seen down about 81% to INR439 million.
8/10
Neutral: 3 cement stocks to watch
Shree Cement (CMP INR21,872 · Target INR24,620), +13%
Volume is expected to rise 9%, but realisation is estimated to fall about 3%. EBITDA per tonne is estimated at INR837, against INR1,106 a year ago. Adjusted profit is seen down about 40%.
ACC (CMP INR1,183 · Target INR1,170), -1%
Sales volume is estimated to decline about 5%, while realisation rises about 1%. EBITDA per tonne is estimated at INR341, against INR732 a year ago, and the operating margin is likely to drop 7.5 percentage points to about 6.4%. Adjusted profit is expected to fall 74% to INR841 million. ACC commissioned a 2.4 million tonne grinding unit in Uttar Pradesh and a 3.0 million tonne blending unit in Maharashtra.
The Ramco Cements (CMP INR830 · Target INR750), -10%
Volume is expected up about 6%, realisation down about 1%. EBITDA is likely to fall 39% to INR2.3 billion, and the company is expected to post a net loss of INR279 million against a profit of INR743 million a year ago. The brokerage cut its FY27 EPS estimate by about 46%.
Volume is expected to rise 9%, but realisation is estimated to fall about 3%. EBITDA per tonne is estimated at INR837, against INR1,106 a year ago. Adjusted profit is seen down about 40%.
ACC (CMP INR1,183 · Target INR1,170), -1%
Sales volume is estimated to decline about 5%, while realisation rises about 1%. EBITDA per tonne is estimated at INR341, against INR732 a year ago, and the operating margin is likely to drop 7.5 percentage points to about 6.4%. Adjusted profit is expected to fall 74% to INR841 million. ACC commissioned a 2.4 million tonne grinding unit in Uttar Pradesh and a 3.0 million tonne blending unit in Maharashtra.
The Ramco Cements (CMP INR830 · Target INR750), -10%
Volume is expected up about 6%, realisation down about 1%. EBITDA is likely to fall 39% to INR2.3 billion, and the company is expected to post a net loss of INR279 million against a profit of INR743 million a year ago. The brokerage cut its FY27 EPS estimate by about 46%.
9/10
Sell: India Cements faces 15% downside
India Cements (CMP INR295 · Target INR250), -15%
The company is the lone Sell in the group. Motilal Oswal expects volume to rise about 10% year on year, but blended realisation could fall about 15%.
There are some positives. Total operating cost per tonne is estimated to fall 18%, and adjusted profit is expected to be INR138 million, against a net loss of INR69 million a year ago. EBITDA per tonne is estimated at INR409, against INR334 a year ago and INR604 in the previous quarter.
Even so, the brokerage’s target price sits 15% below the current market price. It has also cut its EPS estimates by 14% for FY27 and about 5% for FY28.
The company is the lone Sell in the group. Motilal Oswal expects volume to rise about 10% year on year, but blended realisation could fall about 15%.
There are some positives. Total operating cost per tonne is estimated to fall 18%, and adjusted profit is expected to be INR138 million, against a net loss of INR69 million a year ago. EBITDA per tonne is estimated at INR409, against INR334 a year ago and INR604 in the previous quarter.
Even so, the brokerage’s target price sits 15% below the current market price. It has also cut its EPS estimates by 14% for FY27 and about 5% for FY28.
10/10
The bottom line: Pick cement stocks carefully
*Demand is resilient, but fuel costs and weak pricing are squeezing profits.
*Motilal Oswal has cut its sector EBITDA estimates and calls fuel prices a key overhang.
*Early signs of price hikes may help, but the brokerage says their pace and sustainability will decide the outcome.
*Buy: UltraTech Cement, JK Cement, JSW Cement, Grasim, Ambuja Cements, Dalmia Bharat, Birla Corporation and JK Lakshmi.
*Neutral: Shree Cement, ACC and The Ramco Cements.
*Sell: India Cements.
Watch fuel prices and whether October price hikes hold. Those two factors will matter more for cement earnings than volumes.
Ratings, prices and targets are from Motilal Oswal’s cement sector preview and can change. This is not investment advice. Check live prices and speak to a registered adviser before you invest.
*Motilal Oswal has cut its sector EBITDA estimates and calls fuel prices a key overhang.
*Early signs of price hikes may help, but the brokerage says their pace and sustainability will decide the outcome.
*Buy: UltraTech Cement, JK Cement, JSW Cement, Grasim, Ambuja Cements, Dalmia Bharat, Birla Corporation and JK Lakshmi.
*Neutral: Shree Cement, ACC and The Ramco Cements.
*Sell: India Cements.
Watch fuel prices and whether October price hikes hold. Those two factors will matter more for cement earnings than volumes.
Ratings, prices and targets are from Motilal Oswal’s cement sector preview and can change. This is not investment advice. Check live prices and speak to a registered adviser before you invest.