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Cement Sector: Healthy volume growth, favourable cost structure driving improved profitability

ICICIdirect Research 23 Jan 2026 DISCLAIMER

JK Cement and Dalmia Bharat reported results. Overall operational performance of both the companies was better on YoY basis, led by healthy volume growth and favorable cost structure.
Volume growth picked up for JK Cement at 22% YoY while it is 9% YoY for Dalmia Bharat as recent capacity additions by both the companies are also ramping up well.
However, realization was lower by 3-5% on QoQ basis, mainly due to a reduction in incentives (after GST rationalization), higher non-trade sales and some pressure on pricing in south & east markets during Oct/Nov months.
On EBITDA/ton front, Dalmia Bharat reported an improvement of 8% YoY to Rs 825/ton in Q3FY26 while JK Cement’s EBITDA/ton was down by ~7% YoY to Rs 928/ton, due to lower blended realization which negated the impact of lower costs.
The management’s commentary from both the companies remains positive on demand, cost and pricing fronts. They have stated that demand has improved substantially from Dec 2025 onwards (double digit growth), led by an increase in construction activities. Also, companies have taken price hikes of Rs 15-20 per bag in January 2026 across all the regions. Though companies are witnessing positive response as of now, sustainability of these price hikes needs to be seen in the coming days.
We have a target price of Rs 7070 on JK Cement as it is expanding capacity from 31 mtpa to 40 mtpa by FY28E. We estimate volume CAGR of ~12% over FY25-28E with EBITDA/ton improvement to Rs 1361/ton by FY28E (from Rs 1002/ton in FY25), translating to ~24% CAGR in EBITDA over the same period.
Dalmia Bharat is also ramping up capacity to 62 mtpa by FY28E from 49.5 mtpa at present. We estimate volume CAGR of ~8% over FY25-28E with EBITDA/ton improvement to Rs 1340/ton by FY28E (from Rs 819/ton in FY25), translating to ~27% CAGR in EBITDA over the same period. We have a target price of Rs 2650 on Dalmia Bharat

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