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Cement Sector: Operational performance remained strong on YoY basis

ICICIdirect Research 07 Nov 2025 DISCLAIMER

During this week, five major cement companies reported their results including Ambuja Cements, JK Cement, Ramco Cements, Star Cement and JK Lakshmi Cement. Overall operational performance remained healthy on YoY basis, led by better volume growth & realizations along with favorable cost structure
Aggregate volume growth of these companies stood at ~15% YoY in Q2FY26, in which Ambuja and Star Cement led with ~19% YoY and ~22% YoY respectively followed by JK Cement and JK Lakshmi (both reported 14-15% YoY volume growth). Only Ramco Cements reported muted volume growth of ~1% YoY
Average realization of these companies also improved ~4% YoY, as the cement prices increased post Mar/April 2025 onwards and remained firm even during monsoon season
Average EBITDA/ton of these companies has improved by 37% YoY to Rs 983/ton, mainly led realization improvement, favorable cost structure and positive operating leverage.
Star Cement and JK Lakshmi Cement led with 64% YoY and 103% YoY improvement in EBITDA/ton to Rs 1625/ton and Rs 733/ton respectively. This is followed by Ambuja and JK Cement which reported EBITDA/ton of Rs 1042/ton (+33% YoY) and Rs 891/ton (+37% YoY). Ramco’s EBITDA/ton improved by only 22% YoY to Rs 853/ton, mainly on account of negative operating leverage
Going forward, overall operational performance is expected to see further improvement over the long-term. This will be driven by healthy volume growth (led by capacity additions and pick-up in demand) and continuous focus on operational efficiencies (like increasing share of green power, alternative fuels etc)
Overall management’s commentary also has been encouraging in terms of pick-up in demand (led by GST rate cut, rising govt capex in infra). Longer-term industry demand is expected to grow at 7-8% vs supply CAGR of 6%, which will help in gradual improvement in industry utilization rates
We remain positive on Ambuja Cements (target price: 700), JK Cements (target price: 6700), Star Cements (target price: 300) and JK Lakshmi Cement (target price: 1100)

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