However, the brokerage expects EBITDA per tonne to decline, as the benefit of higher cement prices is likely to be offset by higher costs.
The brokerage estimates industry cement prices rose 2.5% quarter-on-quarter in the June quarter, lower than its earlier expectation of 4-5% growth. It said the benefit of higher cement prices is likely to be offset by higher costs during the quarter. In other words, companies are selling cement at higher prices, but rising input costs are expected to eat into much of those gains.
Jefferies expects the impact of higher costs to begin flowing through in Q1FY27, with a more meaningful impact expected in Q2. It estimates a cumulative cost increase of more than ₹300 per tonne over the first half of FY27. Key cost pressures include fuel, freight and other operating expenses, which remain critical drivers of profitability for cement makers.
Among major companies, Shree Cement is expected to report the highest volume growth at 15% year-on-year, followed by JSW Cement at 14%, JK Cement at 13%, and UltraTech Cement at 10.5%. Ambuja Cements, however, is expected to see a 6% decline in volumes. Volume growth is closely watched by investors as it reflects underlying demand for cement across housing and infrastructure projects.
On profitability, Jefferies expects UltraTech Cement’s absolute EBITDA to rise 10% year-on-year, while Birla Corporation could report a 17% increase. In contrast, Shree Cement’s EBITDA is seen declining 7.4%, Dalmia Bharat’s by 17%, and Ambuja Cements’ by 25%.
On FY28 valuations, Jefferies values UltraTech Cement at 15x EV/EBITDA with an enterprise value of $168 per tonne, followed by Shree Cement at 14.5x and $140 per tonne.
Dalmia Bharat and Birla Corporation trade at the lowest valuation multiples of around 9x and 7x EV/EBITDA, respectively. Lower valuation multiples can indicate that stocks are cheaper relative to peers, although they may also reflect weaker growth expectations or company-specific concerns.
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