- Volume growth hits double‑digit levels, but realisation margins shrink across the board.
- Pet‑coke and coal price spikes add 10%‑plus cost pressure.
- New labour codes and rupee depreciation could tighten earnings further.
- Premium and blended cement mixes are offsetting some margin erosion.
- Ready‑Mix Concrete (RMC) units show high‑double‑digit expansion, offering a hidden growth lever.
You missed the hidden cost surge in India's cement rally, and it could erode your gains.
UltraTech Cement's Volume Surge vs Realisation Squeeze
UltraTech posted a 15% rise in consolidated sales volumes to 33.85 million tonnes in Q3 FY2026, lifting capacity utilisation to 77% from 72% a year ago. Yet, sales realisation slipped 0.4% YoY as average bag price barely moved, hovering around Rs 330 per 50 kg bag. The CFO warned that pet‑coke, coal, and the new labour code are inflating costs, while a weaker rupee threatens to magnify import‑linked expenses.
Key definition: Realisation is the average price a cement maker receives per tonne after discounts, GST adjustments, and transportation costs. A dip in realisation directly squeezes profit margins.
Ambuja Cements' Premium Push and Market Share Gain
Ambuja delivered a record 18.9 million tonnes, up 17% YoY, and lifted its market share to 16.6%. The company achieved a Rs 5‑per‑bag premium over the all‑India average by focusing on blended and premium cement blends. CEO Vinod Bahety said the firm will accept lower‑EBITDA volume in exchange for higher‑margin sales, targeting double‑digit volume growth in the next quarter.
This strategic tilt mirrors a broader sector shift toward premiumisation—selling higher‑priced, higher‑margin cement grades to offset raw‑material cost spikes.
Shree Cement, Dalmia Bharat, JK Lakshmi & JSW: Divergent Strategies
Shree Cement reported modest 2% volume growth, emphasizing value over volume. Management highlighted a widening price gap with peers, suggesting Shree can command a pricing premium.
Dalmia Bharat posted a 10% revenue rise and 18% EBITDA improvement, yet flagged softening prices in East and South zones post‑GST cuts. The CEO remains optimistic about mid‑term price support.
JK Lakshmi Cement noted a post‑GST price dip but expects a rebound as demand improves and input costs rise, which should translate into higher selling prices.
JSW Cement saw a 3.56% volume uptick but a 3.9% quarter‑on‑quarter realisation decline, pulling down EBITDA per tonne. The firm leans on anticipated infrastructure‑led capex from central and state governments to revive demand.
Sector‑Wide Input Cost Pressures and Labour Code Impact
Pet‑coke prices surged 10% YoY to Rs 12,280/MT in Jan 2026, while coal costs remain under pressure. Diesel stayed flat, but the combined effect raises the effective cost of production by an estimated 4%‑5% across the sector.
The newly enacted labour code adds compliance costs and potentially higher statutory contributions, a factor not fully quantified but flagged by multiple CEOs as a margin‑drag.
Historical Cement Cycles: Lessons from 2010‑2012
During the 2010‑2012 period, Indian cement makers enjoyed robust volume growth driven by the Golden Quadrilateral highway push. However, a sudden spike in coal prices and GST implementation in 2017 led to a 6%‑8% margin compression. Companies that had diversified into premium blends (e.g., UltraTech’s “Super‑Portland”) emerged with stronger earnings, while pure‑volume players saw share‑price corrections of 12%‑15%.
The parallel is clear: when input costs rise, firms with premium product lines can better preserve earnings.
Ready‑Mix Concrete (RMC): The Silent Growth Engine
All major cement makers reported double‑digit growth in RMC sales, a segment that typically carries higher margins (15%‑20% vs 8%‑10% for grey cement). RMC benefits from urbanisation and the government's push for affordable housing, making it a lucrative ancillary revenue stream.
Investor Playbook: Bull and Bear Scenarios
Bull case: Continued infrastructure spending, successful premiumisation, and a rebound in realisation prices could lift EBITDA margins to pre‑2025 levels. Investors may consider overweighting UltraTech and Ambuja for their scale and premium mix advantage.
Bear case: Persistent input‑cost inflation, slower GST‑related price recovery, and tighter labour regulations could compress margins further, leading to a 5%‑8% earnings downgrade across the sector. Defensive positions in companies with strong RMC footholds (e.g., Shree Cement) may provide downside protection.
Bottom line: The cement sector’s headline‑grabbing volume numbers mask a nuanced battle between cost inflation and price‑setting power. Savvy investors should weigh premium mix strategies, RMC exposure, and policy‑driven demand when sizing their exposure.