The brokerage house Motilal Oswal sees India’s cement sector at an inflection point, where demand trends remain stable but margins are under pressure as a result of rising costs. The brokerage house has also listed out its preferred picks in this sector.
According to the brokerage report, the sector’s outlook now hinges on whether recent price hikes can sustain and offset higher fuel and operating expenses in the coming months.
Let’s take a look at the key reasons why the brokerage is bullish in these stock and the rationale behind it –
Cement sector stocks – Motilal Oswal’s ‘Buy’ recommendation
The brokerage house Motilal Oswal has maintained a ‘Buy’ rating on three key cement sector stocks. These include – UltraTech Cement, JK Cement and Dalmia Bharat. These are the preferred picks across large-cap and midcap segments.
UltraTech Cement has been assigned a target price of Rs 12,800, indicating around 10% upside from current levels. JK Cement has a target of Rs 6,040, suggesting about 6% upside, while Dalmia Bharat is seen reaching Rs 2,110, implying nearly 7% upside.
“We prefer UltraTech Cement in the large-cap space and JK Cement and Dalmia Bharat in the midcap space,” the brokerage noted.
Motilal Oswal on Cement sector: What is driving the outlook?
According to the brokerage report, one of the key factors supporting the sector is the recent increase in cement prices. Across India, prices have risen due to higher input costs, especially fuel and packaging expenses.
“Our channel checks indicate that industry players have implemented price hikes of Rs 15–20 per bag across regions, driven by rising input cost pressures and higher fuel (coal/petcoke) and packaging costs amid the West Asia crisis,” the report noted.
This increase in prices has pushed the all-India average cement price higher. “All-India average cement prices increased 5% month-on-month in April 2026, supported by average price hikes of Rs 15–20 per bag,” the brokerage added.
However, demand in the early part of April remained slightly weak due to higher inventory levels at the dealer level.
According to the brokerage report, demand is expected to improve gradually as construction activity picks up before the monsoon season.
Motilal Oswal on Cement sector: Regional trends show mixed demand
The Motilal Oswal report highlighted that price increases have been seen across regions, but demand trends vary.
Southern and eastern markets have seen sharper price hikes of around 6-7%. On the other side, western, northern, and central regions have seen increases of around 4%.
At the same time, demand has remained uneven. Some regions like Mumbai and Pune have seen better activity due to infrastructure projects, while others, including parts of Gujarat and the southern markets, have seen slower demand due to local factors such as elections or weaker rural activity.
Despite this, the brokerage believes that demand recovery is likely in the coming months. “Dealers expect further price increases going ahead, supported by persistent cost pressures and supply discipline, provided demand continues to improve,” the report noted.
Motilal Oswal on Cement sector: Cost pressures remain a key concern
While pricing has improved, rising costs continue to remain a challenge.
According to the report, fuel costs, especially petcoke (petroleum coke) and coal, have shown mixed trends. Petcoke prices have increased sharply, while coal prices have seen some decline.
As a result, margins are under pressure. “We estimate the all-India average cement spread for trade sales (cement price net of Goods and Services Tax less variable costs) at Rs 272, reflecting margin contraction amid elevated input costs,” the brokerage said.
Motilal Oswal on Cement sector: Key risks to watch
The brokerage report highlighted that the biggest challenge for the sector is sustaining these price hikes.
“While the domestic demand outlook remains constructive, rising input cost pressures, higher competitive intensity, and historically muted realization growth pose key risks,” the brokerage noted.
Furthermore, Motilal Oswal report also added, “Industry players have announced price hikes to offset cost pressures; the sustainability of these hikes remains key to earnings growth.”
Conclusion
Overall, the cement sector is at a point where both opportunities and risks are visible. Demand is expected to improve gradually, but rising costs and competition remain key concerns.
Disclaimer: Investing in cement sector stocks involves market risks and volatility. The price targets and upside potential mentioned are based on brokerage analysis and should not be construed as an offer or solicitation to buy or sell securities. Readers are advised to consult a SEBI-registered investment advisor before making any financial decisions, as individual risk appetites and financial goals vary.
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