Nomura remains constructive on India’s cement sector, naming UltraTech Cement and Dalmia Bharat as its top picks, both with Buy ratings. Its outlook is conditional: while it expects pricing discipline to improve in the second half of FY27 (2HFY27), recent price increases have met weak demand and dealers warn further hikes may be difficult to sustain. These are Nomura’s forecasts and ratings as reported by Moneycontrol News on October 6, 2026—not established outcomes or personalized investment advice.
What is Nomura’s cement-sector outlook?
Nomura maintained its FY27 forecast for cement volume growth at 6–7% and expects stronger pricing discipline in 2HFY27 to help margins recover. That is a forecast, not a reported result. The brokerage’s central condition is that price increases stick: Nomura said “sustained margins will depend more on the industry’s ability to maintain pricing than on further easing in input costs,” as reported by Moneycontrol News on October 6, 2026.
The near-term numbers show why the outlook is not an unconditional recovery call. Nomura put the average adjusted trade price in 2QFY27 at ₹325 per bag, broadly flat quarter on quarter, while average cement spreads were around ₹2,449 per tonne—down ₹62 per tonne quarter on quarter. Price recovery in the second half depends on demand improving and producers maintaining discipline despite cost pressure.
What is happening to cement prices?
Nomura’s channel checks, reported by Moneycontrol, indicated that pan-India average trade prices rose about ₹10 per bag month on month in September. Dealers expected a further increase of roughly ₹10 per bag in October. Those figures describe the reported national trend and dealer expectations; they do not mean every regional market implemented the same increase.
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Dealers characterized the latest push as “largely company-led,” and cautioned that weak offtake, festive-season conditions and monsoon-related construction disruptions could make further hikes difficult to absorb and delay their effective realization. Announced increases therefore should not be confused with prices actually achieved across the market.
How do price trends differ by region?
| Region | Price and demand picture reported October 6, 2026 |
|---|---|
| South | Dealer-indicated October hikes of up to ₹20 per bag, the strongest reported pricing momentum; demand remained weak. |
| West | Volume offtake improved in September. |
| East | Announced ₹10-per-bag hikes had not yet been effectively implemented. |
| North | Announced ₹10-per-bag hikes had not yet been effectively implemented. |
| Central | Prices were largely flat. |
The regional differences matter: a national average can rise even when increases are not yet realized in some markets and demand remains weak in others. Nomura’s case for better pricing after the monsoon rests on recovery in demand and improved industry discipline, not simply on announced hikes.
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Why are margins under pressure?
Fuel and transport costs have limited the benefit of price stability. In 2QFY27, imported pet-coke prices were broadly flat quarter on quarter, while thermal coal rose 2% and retail diesel rose 4%. Average imported fuel costs increased 1% quarter on quarter and were more than 15% above 4QFY26 levels. Moneycontrol’s October 6 report noted that cost pressure intensified late in the quarter following escalation of the West Asia conflict.
Nomura’s fuel-cost-lagged spread measures show that input-cost effects can take time to flow through. Against the 1QFY27 average, the 60-day fuel-cost-lagged spread fell around ₹106 per tonne; the 90-day-lagged measure showed a ₹250-per-tonne decline. These declines sit alongside the 2QFY27 average spread of around ₹2,449 per tonne, down ₹62 quarter on quarter.
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Which cement stocks does Nomura prefer?
Nomura’s two top picks are UltraTech Cement and Dalmia Bharat, both rated Buy in the Moneycontrol report. The report does not provide target prices, valuation comparisons or enough company-level detail to rank one above the other. The preference is a brokerage view, not a guarantee of returns or an individualized recommendation.
For construction-sector readers, the operational signal to watch is whether regional demand strengthens enough for announced price hikes to be realized. Nomura’s forecast depends on that pricing power emerging in 2HFY27; the reported weak offtake and cost pressures explain why it remains a conditional outlook.
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What could prevent the recovery?
- Weak demand: Low offtake can make customers resist increases even when producers announce them.
- Monsoon disruption: Weather-related interruptions to construction can defer purchases and delay price realization.
- Regional mismatch: Reported hikes were not effectively implemented in East and North, while South’s stronger increases coincided with weak demand.
- Input costs: Imported fuel costs remained elevated versus 4QFY26, and lagged spread measures showed further pressure.
The underlying Nomura research note was not available in the reporting account; figures and ratings here are therefore attributed to Moneycontrol News’ October 6, 2026 report on Nomura’s analysis and channel checks.
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