The Indian cement sector is poised for a notable recovery, with demand expected to rise by 8–9% year-on-year in the second half of FY25, according to brokerage firm Motilal Oswal. The firm has reaffirmed its positive outlook for major cement players such as UltraTech Cement, Ambuja Cement, and JK Cement, highlighting a combination of factors that are expected to fuel growth in the sector.
Following a sluggish period marked by stagnant margins, cement manufacturers have recently implemented price hikes ranging from Rs 10-30 per bag. This price adjustment, which reflects a 3.5% quarterly increase, comes on the back of rising demand after the festive season and sustained government spending. Despite cement prices still being 5% lower than the same period last year, the price increases signal a positive shift in market dynamics. Motilal Oswal remains structurally bullish on the sector, with a preference for companies boasting a balanced geographical footprint, high capacity utilisation, and a proven record of expansion and successful integration. In particular, the brokerage firm is optimistic about companies with a significant presence in regions such as North, Central, and West India, which are less exposed to demand-supply mismatches and price volatility.
UltraTech Cement, the country’s largest cement producer, continues to be Motilal Oswal’s top pick in the sector. With a target price of Rs 13,700, the brokerage firm forecasts a 12% compounded annual growth rate (CAGR) in UltraTech’s consolidated volumes from FY24-27. The company is on track to achieve a capacity of 200 million tonnes per annum (mtpa) in the medium term, bolstered by strategic acquisitions and expansions. Additionally, UltraTech plans to ramp up its green energy share to 64% by FY27, further enhancing its sustainability credentials. Ambuja Cement is also expected to see significant growth, driven by its plan to expand grinding capacity to 140 mtpa by FY28. Motilal Oswal anticipates a CAGR of 13% in Ambuja’s consolidated volumes, underpinned by the company’s capacity expansion and cost-saving initiatives. The brokerage has set a target price of Rs 750 for Ambuja Cement.
Meanwhile, JK Cement, which continues to strengthen its foothold in Central India, is targeting a 50 mtpa capacity by FY30. JK Cement’s focus on energy efficiency and cost reduction initiatives is expected to drive a 9% CAGR in sales volumes, with a target price of Rs 5,300. Despite the positive outlook, Motilal Oswal highlights risks such as sustained competitive pricing, which could impact earnings estimates for FY25. However, the long-term prospects remain optimistic, with EBITDA per tonne expected to increase by up to 23% in the second half of FY25.
