Early Monsoon Stalls Cement Price Rally, But Sector Set for Strong Q1: PL Capital
- 1st July 2025
- 04:00:00 PM
- 4 min read
Mumbai | July 1 – India’s cement sector, which saw a strong price rally in April and May driven by infrastructure demand, hit a speed bump in June 2025 as the early monsoon slowed construction across key markets. However, the pullback may prove temporary, with the sector gearing up for a strong Q1 earnings season, underpinned by earlier price hikes and easing fuel costs.
“Despite the peak monsoon ahead, the IHB segment is expected to provide some support as interior work is unlikely to come to a complete halt.” – PL Capital report
Cement Prices Cool Off in June
Dealers across India reported price declines of ₹6–8 per bag in the South, West, and East, while prices remained stable in the North and Central regions. The all-India average cement price dipped by around ₹4 per bag month-on-month, ending June at ₹361 per bag.
With the monsoon progressing, dealers expect further softening in July. However, year-on-year prices remain higher, especially in the southern and eastern markets, reflecting the sector’s underlying strength.
Why Prices Fell: Early Monsoon, Slower Demand
The earlier-than-expected monsoon impacted construction activity and dampened demand, particularly in the IHB (Individual Home Builder) segment, typically a key driver for cement consumption during summer. Labour shortages due to the heatwave and return migration in northern states added to the pressure.
- South: Chennai saw prices drop by ₹10 per bag, while Hyderabad reported subdued demand amid local festivities.
- East: Kolkata and Patna held prices steady but saw moderate demand, with rain starting to impact construction.
- West: Mumbai and Ahmedabad recorded price drops of ₹5–10 per bag as rains halted government and private construction.
- North & Central:Prices stayed flat as heatwaves continued to limit construction activity before monsoon showers.
Strong Q1 Earnings Likely Despite June Pause
Despite the June pause, Q1FY26 is shaping up to be a strong quarter for cement companies. Prices saw steep hikes in April and May, backed by robust infrastructure demand, which should reflect in improved realisations for the quarter.
Additionally, pet coke prices have softened, providing relief on fuel costs and supporting margin expansion. Dealers expect the IHB segment to continue some level of demand even during monsoon, as interior work typically continues.
At PL Capital, we expect southern and eastern-focused cement companies to report strong QoQ EBITDA per tonne growth in Q1FY26, positioning the sector for a healthy start to FY26.
What This Means for Investors
The short-term pause in pricing should not distract investors from the underlying growth trajectory of India’s cement sector. As the government continues to push infrastructure projects and housing demand remains structurally strong, cement demand is likely to remain resilient beyond the monsoon.
The sector also benefits from:
- Government-led infrastructure push
- Steady urbanisation and housing demand
- Moderating fuel costs aiding margins
PL Capital’s Top Cement Picks
PL Capital recommends using this price pause as an opportunity to accumulate quality cement stocks for long-term portfolios.
Top Picks:
- UltraTech Cement (BUY, TP: ₹13,668): Pan-India leader, poised to benefit from demand recovery and operational efficiencies.
- Dalmia Bharat (ACCUMULATE, TP: ₹2,273): Strong exposure in eastern and southern markets with margin tailwinds.
- Ambuja Cement (BUY, TP: ₹658):Cost synergies and capacity expansions position it well for market share gains.
Bottomline
The early monsoon may have paused the cement sector’s price rally, but the demand outlook remains intact for FY26, driven by India’s infrastructure ambitions and steady housing demand. India’s cement sector remains a cornerstone of the infrastructure growth story. The June slowdown is tactical, not structural, and investors with a long-term perspective should consider building exposure to cement stocks during this phase.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
