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.

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