New Delhi [India], November 19 : India's cement industry is poised for sharp earnings rebound in the Financial Year 2026 (FY26), with sector-wide profit expected to grow over 63 per cent year-on-year, driven largely by a favourable low base and continued cost-reduction efforts across companies, according to a sectoral update by Dolat Capital.
The report added that this marks one of the strongest earnings recoveries for the sector in recent years, even as pricing pressures persist.
"The earnings trajectory is set to reverse sharply for FY26 (>63 per cent YoY growth for coverage universe), led by low base on volume/prices coupled with ongoing cost reduction," the report added.
India's cement sector showed mixed performance in the second quarter (Q2) of FY26, with subdued volume growth amid seasonal weakness.
According to the sectoral update, the sector's rebound is underpinned by robust volume growth, improved operational efficiencies, and an increasing focus on premium and trade channel sales, which typically command better margins.
The report added that, in its coverage, the companies are also benefiting from structural cost savings initiated over the past year, including lower logistics expenses, improved fuel efficiency, and optimised plant operations.
However, the report added that the outlook for pricing remains muted. Price hikes are expected to remain difficult, mainly due to significant capacity additions of over 175 million tonnes per annum planned for FY26-FY28.
"Introduction and sustenance of price hike is key monitorable given >175mtpa capacity addition over FY25-28E," the report added.
The report noted that, in a scenario where cement prices stagnate or soften, volume growth, tight cost control and increasing premium product share will be the main levers determining profitability.
Citing two major players, the report added that these manufacturers have already shifted strategic focus toward market share gains, reinforcing the likelihood of a volume-led growth cycle over a pricing-led one.
"As the top 2 companies (Ultratech and Ambuja) prioritise market share gains, the cement industry may move its focus back towards volume growth, thereby limiting any major uptick in pricing," the report added.
Despite the pricing constraints, the sector remains on a positive trajectory as operational metrics improve and demand from infrastructure and housing projects stays resilient.
With efficiency gains compounding over time, the industry appears positioned to deliver a solid earnings recovery through FY26, even in a competitive supply environment, the report further noted.
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