Jefferies likes JK Cement, Shree Cement and 1 more stock as sector to see turnaround in FY26

Global brokerages Jefferies has picked cement scrips namely Shree Cement, UltraTech Cement as well as JK Cement as its top picks from the space. This is as the brokerage expects a turnaround for the space in currently running fiscal year 2025-26.

Likely triggers which may fuel cement pack's run

• Brokerage firm expects the sector's margin to improve from the lowest levels seen in the September quarter of the fiscal year 2025. Also, EBITDA per metric onne which is an important metric for the cement sector has grown from Rs 300 to Rs 1,055 sequentially. EBITDA per metric tonne is a metric that helps interpret how the company efficiently converts each tonne of cement produced into operating profit.
• Cost of power and fuel has registered a 9.5 per cent decline.
• Additionally, what has played out for the sector is the reduction in the input cost by as much as 4 per cent and as increase in realization by as much as 2.6 per cent.
• The fourth quarter of the last fiscal year emerged as the strongest.
• Market players expect an increase in the demand for cement by as much as 8-9 per cent.
• Pricing has also improved in April month when compared to March in all of the regions except Southern India.

Add Zee Business as a Preferred Source

Earlier, Jefferies also included Ambuja Cements in its model portfolio, considering improving margins as well as moderating competition across the industry.

InCred Equities bullish on UltraTech Cement, Birla Corporation; lists them as its top picks

We feel 1QFY26F will be better year-on-year due to a non-election year (last year, demand was subdued due to polls) and less intense heatwave. We retain our Overweight stance on the sector, with Ultratech Cement, Birla Corporation & Ambuja Cements as our top stock picks.

Operarting cost declines year-on-year

Rs /mt 4QFY24 4QFY25
RM Cost 983 968
Power and fuel 1271 1150
Freight and cost 1252 1246
Other Exp 704 696