UltraTech, JK Cement, Ambuja Cements post strong Q1 earnings: Key factors why cement sector outperformed in the June quarter

The June quarter earnings season is its last phase, with very few companies remaining to announce their results. This earnings season was lacklustre for many sectors, including Banking and financials and IT. Banking stocks reported lower margins following steep repo rate cuts in recent quarters, while slower credit growth also impacted the companies.

Meanwhile, the IT sector continues to report subdued earnings amid tepid demand for IT services in the US and global markets. However, despite muted earnings few sectors were outliers and reported better than expected earnings.

The cement sector was one of the few bright spots of the June quarter earnings, with major companies like UltraTech Cement, Ambuja Cements, JK Cement, Dalmia Bharat and others reporting double-digit growth.

*YTD return as of 12 August

Major cement sector companies posted strong quarterly earnings and have also outperformed the broader markets in terms of return, supported by volume growth and pricing improvement. Strong demand momentum and price hikes by companies has also acted as a positive factor for these stocks.

As per experts, prices in South India increased sharply compared to other regions amid higher demand driven by more infrastructure spending in states like Andhra Pradesh and others. Moreover, cement companies were able to sustain these price hikes due to recent mergers and acquisitions by major players. For instance, UltraTech Cement acquired India Cements, while Adani Group took over Penna Cement and Orient Cement.

As per the Crisil report, cement prices are expected to rise between 2 and 4% in the ongoing fiscal year, while demand for cement is likely to grow between 6.5 and 7.5% in FY26. An increase in budgetary allocation by 10% for core infrastructure and above-normal monsoon will boost agricultural profitability, in turn lifting rural housing, which is likely to be positive for the cement industry.

On the flip side, cement sector FY26 profitability will also depend on factors like stable raw material prices, especially for fuel prices. In recent weeks, fuel prices have seen high volatility amid geopolitical uncertainties and the US announcing 50% trade tariffs on India over the import of Russian oil.