Cement sector earnings likely to recover in Q3

NEW DELHI: India’s cement sector is expected to witness an improvement in earnings during the third quarter of FY27, supported by recent price increases and a seasonal recovery in demand, according to a report by Dolat Capital.

The brokerage expects earnings before interest, taxes, depreciation and amortisation (EBITDA) per tonne to rise sequentially by Rs 135, or 16.2 per cent, in Q3FY27. The improvement is expected to come from a 2.1 per cent increase in average selling prices and a 0.3 per cent decline in operating costs per tonne.

Cement prices in the trade segment increased by Rs 9 per bag in October, following a Rs 6 increase in September. Non-trade prices also went up by Rs 5‑20 per bag across markets.

The report said further price increases after Diwali could help companies manage rising costs of cement bags, coal, petcoke and diesel.

During Q2FY27, the companies covered by the brokerage reported a 13.9 per cent rise in revenue to Rs 58,980 crore. Sales volumes rose 9.7 per cent to 103.7 million tonnes. EBITDA, however, declined 1.8 per cent to Rs 8,650 crore and EBITDA per tonne fell 10.4 per cent to Rs 834.

The brokerage noted that infrastructure and housing demand supported industry growth of 8‑9 per cent during the first half of FY27.

However, additional capacity of 173 million tonnes annually against expected demand growth of 122 million tonnes during FY26‑29 may restrict price increases. Cost control and efficiency will remain important for cement companies.