Will Indian Cement Companies Deliver Resilient Q2 Earnings with 4% Volume Growth?
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Synopsis
As Indian cement companies gear up for their Q2 earnings, a new report sheds light on their resilience amid challenges. With price sustainability and limited margin pressures, the industry is set to witness a 4% volume growth. What does this mean for investors and the market at large? Let's explore the implications.
Key Takeaways
- Indian cement companies are projected to achieve 4% volume growth in Q2FY26.
- Price stability has contributed to steady operational metrics.
- Significant capacity additions are set for this fiscal year.
- The recent GST reduction is expected to enhance operating profit.
- Petcoke prices and the weakening rupee present challenges.
New Delhi, Sep 24 (NationPress) The cement industry in India is anticipated to demonstrate remarkable resilience in the forthcoming earnings season, attributed to sustained pricing and minimal margin pressures, even amidst lower volumes, according to a recent report.
The report from US brokerage firm Goldman Sachs indicates that price stability observed in July and August, despite disappointing volume figures in a traditionally weak quarter, has contributed to steady operational metrics for Indian cement firms.
Goldman Sachs has assigned 'buy' or 'neutral' ratings to major cement players in India, predicting a modest year-on-year industry volume growth of around 4 percent for Q2FY26. The firm suggested that the recent GST reduction could stimulate demand towards the end of September.
While early September showed a dip in activity, an uptick is anticipated in the final week of the month, driven by a surge in pent-up demand related to the GST changes.
Although costs remain generally stable, there has been a recent spike in petcoke prices, compounded by the depreciation of the rupee, adding further strain.
This fiscal year, significant capacity expansions are on the horizon, with the three largest cement companies in India projected to add around 41 million tonnes.
The brokerage estimates that the industry will introduce about 45-50 million tonnes of capacity in FY26, surpassing the anticipated incremental demand of 31 million tonnes for the same period.
Goldman Sachs reported that numerous construction projects are underway, with the majority of the 45-50 million tonnes expansion pipeline already initiated, although companies may selectively postpone expansions in light of softening demand.
The report also pointed out that price hikes implemented in Q1 have only slightly adjusted in Q2, averaging an increase of Rs 5–10 per bag, or approximately Rs 120 per tonne compared to levels from June 2025.
Additionally, credit rating agency ICRA previously indicated that the GST reduction will enhance the operating profit of cement companies by Rs 100-150 per metric tonne (MT).
Point of View
I believe the resilience of the Indian cement sector reflects the broader economic dynamics at play. While challenges persist, the anticipated volume growth and strategic adjustments by companies denote a proactive approach to market fluctuations, aligning with national growth objectives.
NationPress
24/09/2025
Frequently Asked Questions
What is the projected volume growth for Indian cement companies in Q2FY26?
Goldman Sachs anticipates a modest industry volume growth of approximately 4 percent year-on-year in Q2FY26.
How will the GST cut affect cement companies' profits?
ICRA predicts that the reduction in GST will boost the operating profit of cement companies by Rs 100-150 per metric tonne.
What are the recent trends in cement pricing?
Price increases from Q1 have only slightly corrected in Q2, with an average adjustment of Rs 5–10 per bag.
What capacity expansions are expected in the cement sector this fiscal year?
India's three largest cement companies are expected to add around 41 million tonnes this fiscal year.
What impact does a weakening rupee have on cement companies?
A weakening rupee adds additional pressure on costs, particularly with rising petcoke prices.
