UltraTech Cement, Shree Cement, ACC: Cement industry likely to post 9% volume growth in 2HFY26

It also expects the industry's margins to grow by 250-300 bps, helped by factors such as higher realisation, stable costs, the GST cut, premiumisation, and volume growth, which will ease pressure on manufacturers.

In the context of cement companies, the phrase 'higher realisation' refers to a higher average selling price per unit of cement. In other words, a company is achieving better revenue per tonne (or per bag) of cement sold.

'Premiumisation' means increasing the share of higher-quality, higher-priced cement products in their sales mix. These “premium” products typically offer better performance and are sold at a higher margin compared to regular (trade or base-grade) cement.

"Improved realisations driven by volume and premiumisation amid steady selling prices and cost of inputs will lead to a 250-300 basis points (bps) growth in the profitability of cement manufacturers this fiscal," the report said.

The report also expects an overall higher growth of 6.5 to 7.5% this fiscal year against around 5% in the previous fiscal year.

Volume growth in 1HFY26

"In the first half of this fiscal year, volume grew a moderate 5% year-on-year, rebounding after flatlining in the same period last fiscal year. In the second half of this fiscal year, volume is seen rising 8-9% year-on-year, fuelled by pent-up demand from the first half and better liquidity," it said.

The report also said that average Pan-India cement prices are expected to remain range-bound at ₹354-359 per 50 kg bag.

"The reduction in the goods and services tax (GST) rate from 28% to 18% will exert downward pressure on retail prices. However, "premiumisation will offset the pressure and, together with higher demand, aid an improvement in realisations for the manufacturers," it added.

Excluding GST, cement prices are estimated to rise 3-4% year-on-year in the coming quarter.

"However, the reduction in GST is expected to lead to a decline in overall prices," it noted.

The report is based on an analysis of 14 major cement manufacturers, which account for 85% of the industry’s revenue.

"The 14 manufacturers saw a 5% increase in realisations in the first half of this fiscal year. The momentum is expected to slow in the second half, with realisations growing a modest 0-2%. Consequently, the full-year average improvement is expected to be 2.5-3.5%," it said.

In terms of regions, healthy demand prospects and a low base are expected to support price recovery in the east and south, leading to prices inching up 0-2% in those geographies this fiscal, after declining 12% and 7%, respectively, last fiscal.

"Prices in the other regions, however, are expected to dwindle 2-3%," it said.

Cost projections

Meanwhile, on the cost side, power and freight costs, which together comprise 54-55% of the total expenses, are projected to fall 2-3% and 1-2%, respectively, this fiscal year.

"Raw material costs are likely to remain elevated because of higher limestone prices. However, overall costs are expected to be stable, resulting in an expansion in operating margin to 18-20% from 16% last fiscal year," it said.

Cement sector Q2 FY26 results review

Most cement companies reported a robust performance for the quarter ended September 30, 2025 (Q2 FY26). In their earnings statements, the companies noted that despite challenges such as an extended monsoon, distribution adjustments following GST rate cuts, and early festive demand, the sector has benefited — and is expected to continue benefiting — from several positive developments, including the GST 2.0 reforms, the Carbon Credit Trading Scheme (CCTS), and the removal of the coal cess.

Additionally, a continued push toward premium products, higher sales volumes, and improved pricing supported earnings growth across most companies in Q2.

Although seasonal softness and planned maintenance shutdowns weighed on sequential results, the broader outlook remains favourable, and the trajectory ahead appears stable.

“Realisations rose by Rs 250–300 per tonne year-on-year, largely due to stronger cement prices, which enabled companies to enhance their earnings before interest, tax, depreciation, and amortisation (Ebitda) per tonne compared to last year,” said a Business Standard report, citing an analyst.

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