Cement shares surge up to 8% today. What's fueling the rally?
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Shares of cement companies were in the spotlight on Tuesday, witnessing gains of up to 7.5% during intraday trade. The positive momentum was largely driven by strong operational performance reported by companies in their June quarter (Q1FY26) earnings, which highlighted improved profitability and healthy demand trends.Among the gainers, India Cements shares rallied 7.5% to Rs 368.8, Dalmia Bharat shares surged 3.4% to Rs 2,341.90, Birla Corporation shares were up by 7.2% to their day's high of Rs 1,490.10, while Ramco Cements recorded gains of 3.8% to hit Rs 1,193.95.Further, counters like Ambuja Cements rose 2% to Rs 625, Shree Cement by 2.8%, JK Cements by 1.9%, and JK Lakshmi Cement went up by 2.6% to Rs 1,020.85The upbeat sentiment across cement counters comes amid reports of improved year-on-year profitability for major players during Q1FY26. Volume growth, coupled with better realisation, appears to be supporting this turnaround.Companies are now focusing on expanding production capacities and strengthening their regional presence to drive future growth. For instance, UltraTech Cement aims to ramp up capacity from around 192 million tonnes per annum (mtpa) currently to over 217 mtpa by FY27.Additionally, there is an emphasis on operational efficiency initiatives, including targeted reductions in production costs over the next few years, which could further enhance profitability.The recent surge in cement demand follows a challenging phase last year, when the sector grappled with muted demand amid lower government spending ahead of the general elections and disruptions due to monsoons.However, with infrastructure spending picking up and project execution improving, especially in the second half of the previous fiscal year, demand trends are showing signs of stability.Looking ahead, sector participants expect a robust recovery, backed by infrastructure development, housing expansion, and urbanisation.While short-term challenges such as overcapacity and competitive pricing pressures remain, capacity expansions and cost rationalisation efforts are likely to strengthen the sector's long-term growth trajectory.Overall, the cement sector's growth continues to be volume-driven, supported by infrastructure projects, housing developments, and metro connectivity initiatives across the country.Also read: Beyond 1:1 bonus issue, why HDFC Bank shares remain top pick after Q1 results Though pricing pressures are likely to persist in the near term due to competitive intensity, the demand backdrop, driven by public and private sector investments, provides a positive medium-term outlook.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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