New Delhi — India’s cement industry is expected to deliver resilient earnings in the upcoming quarter, supported by stable prices and controlled margin pressures despite muted demand, according to a report by Goldman Sachs.
The brokerage noted that prices held firm through July and August even as volumes came in weaker during the seasonally soft quarter, ensuring stable operating performance. It has assigned ‘buy’ or ‘neutral’ ratings on leading cement stocks.
Goldman Sachs projects a 4 per cent year-on-year volume growth in Q2 FY26, while pointing out that the recent GST cut could push demand higher towards the end of September. The report flagged weakness in early September but expects a rebound in the final week of the month, spurred by pent-up demand linked to GST adjustments.
On the cost side, most inputs remain steady, though rising petcoke prices and a weaker rupee are adding pressure. Capacity expansion continues at pace, with the top three cement producers alone expected to add nearly 41 million tonnes this fiscal. Overall, the industry is forecast to add 45–50 million tonnes of capacity in FY26, exceeding the projected demand growth of 31 million tonnes.
Goldman Sachs highlighted that most expansion projects are already under construction, and companies are likely to defer capacity only selectively if demand softens further.
Meanwhile, it observed that the price hikes implemented in Q1 have only corrected marginally in Q2, with average reductions of Rs 5–10 per bag (around Rs 120 per tonne) compared to June 2025 levels.
Earlier, credit ratings agency ICRA had also said that the GST cut would improve cement makers’ operating profits by Rs 100–150 per metric tonne (MT).
With inputs from IANS