3 cement stocks that could surprise in FY26. Everything you need to know - Stock Insights News | The Financial Express
Cement demand is gaining pace. Crisil expects demand growth to move up to 6.5%–7.5% in FY26 from 4.5%–5.5% last year. Price increases, which began in December 2024, have held firm. So far, rates have gone up by over 3%, and another 2%–4% may be added this year. Both volumes and pricing are improving. That usually reflects in better revenue and steady margins.
Infrastructure will continue to lead demand, contributing around a third of total consumption. Rural housing is likely to support volumes too, helped by higher farm income and ongoing government support.
On the supply side, 43–45 million tonnes of new cement capacity are expected in FY26. Companies are getting ready for a busier year. The market is beginning to reprice growth. We’ve selected three stocks with solid results and clear management guidance pointing to improved performance in FY26.
A part of the Aditya Birla Group, UltraTech Cement is the market leader in the Indian cement industry, boasting a total capacity of 183.4 million tonnes per annum (MTPA). It also has 5.4 MTPA of overseas capacity, making it the third-largest by cement capacity globally, excluding China.
Its capacity growth has come from both organic and inorganic means. Over the years, UltraTech has added substantial capacity by acquiring cement businesses, including India Cement (14.45 MTPA), Kesoram (10.8 MTPA), Jaiprakash Associates (21.2 MTPA), Century Textiles (14.6 MTPA), and Binani Cement (6.25 MTPA).
The company’s presence is geographically diversified, with the South leading at 50.5 MTPA, following the consolidation of cement assets from India Cements and Kesoram. This is followed by North (34.8 MTPA), West (32.1 MTPA), East (31.9 MTPA), and Central India (28.4 MTPA).
With new acquisitions and planned expansions, UltraTech is well-positioned to maintain its leadership. Its ongoing capital expenditure initiatives are expected to increase India’s capacity to 210.5 MTPA and overall capacity to 215.9 MTPA by FY27.
The company’s revenues increased 7% from the previous year to ₹749 billion in FY25, driven by a 14% volume growth. Domestic grey cement, which accounts for 92% of total volumes, grew 11%, while white cement volumes increased 6%. Exports and overseas volumes saw strong growth of 30% and 29%, respectively.
Despite higher volumes, EBITDA margin declined 1.7 percentage points to 17.8%. Net profit fell 14% to ₹60.4 billion due to higher finance costs, depreciation, and amortization. EBITDA means Earnings Before Interest, Taxes, Depreciation, and Amortization.
Looking ahead, the company has outlined an investment of ₹100 billion in FY26. 69% of which is for growth capex, 15% for ESG, and 16% for other initiatives. In FY25, the company achieved a cost reduction of ₹86 per tonne, as part of its broader plan to save ₹300 per tonne by FY26.
Sustainability is also a growing focus. UltraTech aims to increase its green power mix to 85% by FY30, up from 35.7% in Q4FY25. Its alternative fuel mix is expected to reach 15% by FY27, compared to the current 7%.
The company anticipates double-digit growth in FY26, supported by recent acquisitions and infrastructure demand. It also aims to gain market share and boost cost efficiencies.
From a valuation perspective, UltraTech trades at an EV/EBITDA multiple of 27x, higher than the 10-year median of 19x.
JK Cement is among the largest manufacturers of white cement (including wall putty) in India and globally. It has a total white cement and wall putty capacity of 3.05 MTPA. The Indian white cement market has high entry barriers and limited competition, making it a two-player space.
On the grey cement side, JK Cement has a capacity of 24.34 MTPA, ranking it sixth in the country. Its operations are spread across Central, Southern, and Western India, supporting geographical diversification.
In FY25, JK Cement’s net sales increased by just 2.8% to ₹118.8 billion, primarily due to subdued volume growth. Grey cement volumes rose 5.7% (vs. 18.9% in FY24) while white cement volumes grew 0.8% (vs. 7.1% in FY24), impacting revenue momentum.
EBITDA margin contracted slightly, down eight basis points to 17.1%. However, net profit increased 10% to ₹8.7 billion, aided by lower taxes.
Looking ahead, JK Cement management aims to achieve a 12% growth in grey cement volumes in FY26. Most of this is expected to come from the ramp-up of the Central India plant. The company is seeing volume recovery in Central India, while the North and South regions are tracking industry growth.
JK Cement achieved cost savings of ₹40 per tonne in FY25, out of the targeted savings of ₹150-200 per tonne. In line with this target, it plans to achieve cost savings of ₹25-30 per tonne in FY26.
The company expansion plans also remain on track. The clinker unit, with a capacity of 3.3 MTPA and 6 MTPA for grinding, is expected to be completed by Q3 FY26. It plans to invest ₹18 billion in FY26.
The green energy transition is progressing well, with 51% of energy requirements being met by green energy. This is expected to rise to 60% in FY26. From a valuation perspective, JK Cement trades at an EV/EBITDA of 21x, a premium to the 10-year median of 14x.
Birla Corporation, part of the MP Birla Group, manufactures cement and jute goods. The company holds a strong position in the central region, with a market share of 11%. Its current capacity stands at 20 MTPA, with operations spread across Western, Central, Northern, and Eastern regions.
The company’s capacity utilisation improved to 91% in FY25 (from 88% in FY24), reflecting strong demand. The improvement was driven by the ramp-up of Mukutban operations, which is operating at 80% capacity. It aims to increase this to 85% by FY26.
In FY25, Birla Corporation’s net sales declined 4.6% to ₹92 billion, due to lower realisations and cement sales. Cement sales remained subdued at 2.5%, compared to 12.2% recorded last year.
As a result, EBITDA margin declined 1.7 percentage points to 13.2%. Net profit fell by about 40% to ₹2.96 billion. The weaker overall performance was due to subdued growth recorded in the nine months of FY25. In contrast, profit in Q4 increased 33% to ₹2.6 billion, driven by price hikes and higher premium product sales.
Looking ahead, the company remains optimistic about demand trends, which saw a big jump in Q4FY25. The company indicated a gradual recovery in the North and East regions, leading to growth in both volumes and realisations.
While near-term visibility remains stable, full momentum is expected in FY26, with volumes expected to grow by ~6–8%. The company has also announced the next phase of capacity expansion. Clinker capacity is expected to increase from 13 MTPA to 16.7 MTPA and grinding capacity from 20 MTPA to 27.6 MTPA.
The share of green power stood at 25%, and aims to increase this to ~36–37%. From a valuation perspective, Birla Corporation trades at an EV/EBITDA multiple of 11x, in line with the 10-year median of 10x.
The Indian cement industry could be heading into a better phase in FY26, supported by infrastructure projects and steady housing demand. Management commentary also reflected optimism on volume growth. UltraTech Cement, JK Cement, and Birla Corporation seem well placed to ride this uptrend, backed by ongoing capacity additions, cost control measures, and a gradual push towards sustainability.
Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data was not available have we used an alternate but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
