Synopsis: Investec expects a gradual Q4 recovery in cement stocks, supported by price hikes and operating leverage, though higher fuel costs may cap margin gains. It maintains a Buy rating on select players like UltraTech, Ambuja, JSW Cement, and JK Cement.
Cement stocks are drawing attention ahead of Q4 results as investors look for signs of recovery after a subdued quarter. Brokerage firm Investec has shared its latest view on the sector, highlighting key trends and select opportunities.
Cement stocks tend to come into focus in Q4 as the sector typically witnesses a recovery in demand following the monsoon, leading to improved sales volumes and pricing power. The quarter often benefits from increased construction activity, government infrastructure spending and rural housing demand, which support better realisations and margin expansion.
Over the past month, JK Cement Ltd slipped 3% and Ambuja Cements Ltd declined 6%, while UltraTech Cement Ltd edged up 1%. Meanwhile, JSW Cement Ltd outperformed with an 11% gain.
Investec on Cement stocks
According to Investec, most cement companies reported weaker EBITDA per tonne during the quarter, indicating pressure on profitability. However, exceptions to this trend were UltraTech Cement and JK Cement, which performed relatively better compared to peers.
Investec expects spreads (the difference between cement prices and costs) to improve quarter-on-quarter in Q4, supported by modest price increases and operating leverage benefits as volumes pick up. That said, higher fuel costs are likely to partially offset these gains, limiting the overall margin expansion for companies across the sector.
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The brokerage also reiterates its view that spreads may have already peaked in Q1 FY26, suggesting limited upside beyond that period. While capacity additions are continuing across the industry, companies are increasingly focusing on return on invested capital (RoIC) discipline, especially through brownfield expansions, which are generally more cost-efficient than setting up entirely new plants.
Despite near-term challenges, Investec maintains a “Buy” rating on select cement companies, including UltraTech Cement, Ambuja Cements, JSW Cement, and JK Cement, reflecting confidence in their operational strength and long-term growth prospects.
In conclusion, cement stocks may witness a measured recovery in Q4 driven by modest price increases and operating leverage benefits. However, rising fuel costs and the view that spreads have already peaked could limit the upside. The rebound, therefore, is likely to be gradual and selective, favoring fundamentally strong players over a broad-based sector rally.
Financials of Cement companies
JK Cements Ltd
JK Cement reported an 18% year-on-year rise in sales to Rs. 3,463 crore in Q3FY26 compared to Rs. 2,930 crore in Q3FY25. EBITDA increased 13% YoY to Rs. 557 crore from Rs. 492 crore, reflecting improved operating performance. Net profit declined 8% YoY to Rs. 174 crore versus Rs. 190 crore in the year-ago quarter. EPS declined 8% YoY to Rs. 22.60 from Rs. 24.54.
The company has a grey cement capacity of 28.26 MTPA, which includes 0.42 MTPA from its subsidiary. Additionally, it has a white cement and wall putty capacity of 3.05 MTPA, including 0.60 MTPA contributed by the subsidiary.
Ultratech Cement Ltd
UltraTech Cement reported strong year-on-year growth in the Q3FY26, with sales rising 23% to Rs. 21,830 crore from Rs. 17,779 crore in Q3FY25. EBITDA surged 35% YoY to Rs. 3,911 crore compared to Rs. 2,893 crore, reflecting improved margins and operating leverage. Net profit increased 27% YoY to Rs. 1,729 crore from Rs. 1,363 crore, while EPS grew 24% to Rs. 58.55 from Rs. 47.09.
The company’s total domestic grey cement manufacturing capacity is 191.36 MTPA, and with an additional 5.4 MTPA from its overseas operations, the company’s total global cement capacity reaches 196.76 MTPA.
Ambuja Cements Ltd
Ambuja Cements reported a 10% year‑on‑year rise in sales to Rs. 10,277 crore in Q3FY26 from Rs. 9,411 cr in Q3FY25. EBITDA declined sharply, falling 21% to Rs. 1,353 crore from Rs. 1,712 crore, and net profit plunged about 86% to Rs. 367cr, compared with Rs. 2,663 crore in Q3FY25. Earnings per share (EPS) dropped about 91% to Rs. 0.82 from Rs. 8.76 a year earlier.
For Q3FY26, it reported a total cement production capacity of 109 MTPA, with a clinker factor of 67.3%. The company operates 24 integrated cement units and 22 grinding units, with blended cement accounting for 77% of the total production. Its infrastructure includes 117 ready-mix concrete plants, 10 bulk cement terminals, and 11 captive ships, supporting wide distribution.
Ambuja Cement continues to focus on sustainable practices, achieving a thermal substitution rate of 6.6%, and maintains a robust network of over 1,20,000 channel partners across India.
JSW Cement Ltd
JSW Cement reported strong year-on-year growth across key financial metrics. Sales rose 13% to Rs. 1,621 crore in Q3FY26 from Rs. 1,433 crore in Q3FY25, while EBITDA more than doubled with a 146% increase to Rs. 285 crore from Rs. 116 crore. Net profit surged to a profit of Rs. 131 crore from a loss of Rs. 80.2 crore, reflecting a major turnaround. Earnings per share (EPS) also jumped to a positive Rs. 1.04 from a negative Rs. 0.68.
It operates a scaled capacity with 21.6 MTPA grinding capacity across 7 units and 6.44 MTPA clinker capacity across 3 units, serving South, West, and East India. It is among India’s fastest-growing cement manufacturers, with a grinding capacity CAGR of 12.96% versus the industry average of 4.77%, and a sales volume CAGR of 16.73% compared to the industry’s 6.15%, achieving total volumes of 12.64 MMT.
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