Despite a squeeze on margins due to the ongoing West Asia crisis, brokerage firm Motilal Oswal remains optimistic about the Indian cement sector. In its latest report, the firm identifies a potential 10% upside in select stocks, driven by successful price hikes and an expected pre-monsoon construction surge.
The “Buy” List: Target Prices and Potential
Motilal Oswal has focused its recommendations on a mix of large-cap stability and mid-cap growth.
| Stock Name | Category | Target Price | Upside Potential |
| UltraTech Cement | Large-cap | ₹12,800 | ~10% |
| JK Cement | Mid-cap | ₹6,040 | ~6% |
| Dalmia Bharat | Mid-cap | ₹2,110 | ~7% |
Key Drivers: Price Hikes and Regional Trends
The primary catalyst for the “Buy” ratings is the industry’s ability to pass on rising costs to consumers.
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Price Hikes: Channel checks reveal price increases of ₹15–20 per bag across India in April 2026. This has led to a 5% month-on-month increase in the all-India average cement price.
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Fuel Pressures: The West Asia crisis has spiked petcoke and packaging costs, making these price hikes essential for survival.
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Regional Variation:
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East & South: Leading with aggressive price hikes of 6-7%.
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North, West & Central: More moderate increases of around 4%.
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Demand Hotspots: Infrastructure projects in Mumbai and Pune are keeping demand steady, while Gujarat and the South have seen a temporary lull due to local elections and weak rural activity.
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The Challenge: Margin Contraction
While top-line growth looks promising, the bottom line is under pressure. The brokerage estimates the all-India average cement “spread” (price minus GST and variable costs) at ₹272, a figure that reflects significant margin contraction compared to historical averages.
Risks to the Outlook
The brokerage warns that the “Buy” case hinges on three major variables:
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Sustainability: Can the ₹15-20 price hikes hold if demand doesn’t accelerate?
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Competition: Intense rivalry in the sector often leads to price wars, undermining the benefits of hikes.
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Monsoon Impact: A typical seasonal slowdown in construction could dampen demand before the price increases fully offset cost pressures.
Conclusion
Motilal Oswal views the current dip as an “inflection point.” While input costs are high, the discipline shown by major players in raising prices suggests that earnings could recover by late 2026 if construction activity remains constructive.
