Brokerage firm CLSA has highlighted a positive pricing trend in the cement sector, noting that spot cement prices are currently 4%–6% higher than the FY25 average, with the steepest increases observed in southern and eastern India. This comes despite muted demand, suggesting that the industry may be regaining pricing discipline.
In its sector update, CLSA pointed out that while profitability and return on capital employed (ROCE) remain low, there is upside potential. FY25 EBITDA per tonne currently stands at just US$11, far below the replacement cost of US$70–90 per tonne. However, the firm sees a strong rebound ahead, projecting an industry volume CAGR of 7% over FY25–27, along with an EBITDA per tonne CAGR of 18%, which could significantly boost the profit pool.
Among key players, Ambuja Cements and Ultratech Cement are seen as better positioned to benefit from this expected recovery, given their scale, market reach, and operational efficiencies.
Disclaimer: The views expressed in this article are those of the brokerage firm and do not constitute investment advice by Business Upturn. Investors are advised to consult their financial advisors before making any investment decisions.