Cement shares in focus: Why Dalmia, Sagar, Birla Corp rise up to 4% today?

Business Standard

6 days ago

Cement companies share price today
Shares of cement companies were in focus on Tuesday as they traded higher by up to 4 per cent. The rise in cement share prices came after companies from the sector that have announced their June quarter (Q1FY26) earnings so far, reported a strong operational performance during the quarter.
India Cements, Dalmia Bharat, Sagar Cements, Birla Corporation, and The Ramco Cements shares were trading higher in the range of 2 per cent to 4 per cent. Ambuja Cements, ACC, Shree Cement, JK Cements, and JK Lakshmi Cement, meanwhile, were up less than 1 per cent. In comparison, the BSE Sensex was up 0.19 per cent at 82,359 at 09:27 AM.
In the past one month, the stock price of UltraTech Cement, Dalmia Bharat, Ambuja Cements, ACC, Shree Cement and JK Cements have surged between 10 per cent and 15 per cent as against a 0.61-per cent rise in the BSE Sensex.
UltraTech Cement's profitability improved considerably on a year-on-year (YoY) basis in Q1FY26, led by healthy volume growth amif improvement in realisation. Volume growth visibility, according to analysts, remains strong considering the company's continuous focus on adding capacities and gaining market share across regions (target to reach total capacity of 217 mtpa by FY27 from current capacity of 192.3 mtpa).
Moreover, with a strong focus on operational efficiencies (target of further reduction in total cost/tonne by ₹300/tonne over the next 2-3 years), overall operational performance is expected to improve substantially in the coming period, they said.
Sagar Cements' operational performance, too, came above expectations, mainly on account of higher-than-expected realisation and improvement in capacity utilisation rates across plants (including subsidiary units like Andhra Cement). Moreover, management guided the sales volume of 6 mtpa for FY26E, which implies a growth of ~9 per cent Y-o-Y. With focus on operational efficiency measures, overall profitability is expected to improve substantially going forward, ICICI Securities said in a note.
Cement industry outlook
Cement industry saw a slowdown in demand during the first quarter of the previous financial year (Q1FY25), as general election 2024 resulted in curtailed demand due to lower government spending and labour availability. Heavy rains during the monsoon period further impacted the demand. As a result, the overall demand was soft during the first half (H1FY25). However, increased government spending and overall pick up in economic activities in the second half helped build much needed momentum in demand in the previous financial year.
Going ahead, the Indian cement industry is poised for robust growth, driven by infrastructure spending, urbanisation, and housing demand. While overcapacity and low utilisation rates pose short term challenges, strategic expansions, consolidation, and sustainability efforts position the sector for long-term success, analysts said.
"During FY26, the industry is expected to achieve 6.5-7.5 per cent demand growth fueled by infrastructure projects, rural recovery and real estate momentum. The industry's ability to balance growth with sustainability and cost efficiency will be critical to cementing its role in building a new India," Shree Cement said in its FY25 annual report.
Meanwhile, the share of the infrastructure segment in cement demand has been increasing over the past decade, mainly due to a surge in the government capital expenditure in the infrastructure segment. The infrastructure segment's share has doubled from 11-13 per cent in FY2012-13 to 29-31 per cent in FY 2023-24 with corresponding reduction in share of housing, industrial and commercial demand. Going forward, JK Cement expects the infrastructure segment share to rise further to 32-34 per cent by FY 2028-29 due to the continued increase in central and state capital expenditure on roads, railways, metros, airports, and irrigation.
The sector's growth remains volume-led, anchored by government-led infrastructure development, private capital expenditure, and housing expansion. The sector is poised for long-term growth, supported by housing, roads, metros, and infrastructure spending. However, competitive intensity in pricing is expected to remain high in the near term. For Ramco, the path forward is clear: deliver higher volumes from upcoming capacities, sustain efficiency, and scale adjacencies that add to margin stability, the management said.