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Cement stocks have had a quiet but steady run over the past year. While broader markets chased flashy narratives, this old-economy sector focused on execution, capacity and margin discipline.

The result? Many cement companies now have a strong foundation, backed by expanding capacity, falling input costs, and improving sales realisations.

Investors eyeing long-term plays would do well to look at companies building capacity smartly and protecting their profitability. We spotlight five such names in this article.

Shree Cement is expanding fast, but not at the cost of profitability. Its current cement capacity stands at 62.8 million (m) tonnes, supported by 36.7 million tonnes of clinker. The company plans to reach 80 million tonnes by FY28, adding scale without stretching its balance sheet.

In Q4 FY25, Shree Cement reported a 13% jump in volumes to 9.84 million tonnes. Realisations improved to ₹4,768 per tonne.

Operating profit shot up 47% sequentially. Profit per tonne stood at ₹1,406 and adjusted for one-time costs, the figure was ₹1,437.

The company has commissioned 6.4 million tonnes of new capacity at Etah and Baloda Bazar. By end FY26, Kodla and Ras Jaitaran units will have the capacity to 68.8 million tonnes.

Capital spending for FY26 is pegged at ₹3,000 crore, fully funded from internal accruals. Net cash stood at ₹5,400 crore in March.

Ramco Cements has been quietly reshaping its portfolio. While volumes stayed flat in FY25, the company has laid the groundwork for a more profitable and diversified future.

Cement sales in FY25 stood at 18.5 million tonnes, up just 1%. Realisations fell 10% year on year (YoY), dragging full year revenue to ₹8540 crore, down from ₹9390 crore. Ebitda dropped 20%, though reported profit was aided by ₹340 crore from sale of non-core assets.

Operating leverage improved as energy and freight costs softened. Ebitda per tonne for the March quarter stood at ₹631.

Going forward, the company is pressing ahead with expansion plans. Cement capacity is expected to reach 30 million tonnes by March 2026. A new railway siding at Kolimigundla and two waste heat recovery units will improve cost efficiency.

FY26 capex is pegged at ₹1,200 crore, funded partly through internal accruals and asset sales.

Premium products formed 27% of volumes in the south and 23% in the east. Construction chemicals continue to scale up, with a new Odisha unit expected by mid-2025.

The business has taken a knock from weak prices, but the cost structure is improving.

UltraTech Cement, India’s largest player, is operating at a domestic capacity of 183.4 million tonnes. Two big acquisitions, India Cements and Kesoram, have added scale, pushing consolidated volumes for FY25 to 135.8 million tonnes, up 14% YoY.

The March quarter was strong. Grey cement domestic volumes rose 10%, and EBITDA per tonne improved to ₹1,270, up 6% from last year. The cost efficiency gains supported margins.

Premium products now make up 31% of volumes, and the ready mix concrete business is growing rapidly.

Capacity is set to reach 210.5 m tonnes by FY27. Capex for FY26 is guided at ₹10,000 crore. Net debt stood at ₹1,770 crore in March 2025. The management expects to bring it down as cash flows improve.

India Cements and Kesoram will undergo full integration and rebranding over the next two years. These assets are expected to cross ₹1,000 per tonne Ebitda by FY28.

Shree Digvijay Cement is a small-cap cement stock with big ambitions. The company manufactures and sells cement under the ‘Kamal’ brand, including Portland pozzolana, OPC, SRPC, and oil well cement.

It operates at a capacity of 1.5 million tonnes, recently expanded from 1.2 million tonnes, which helped improve realisations and cost absorption.

Over the past five years, revenue has grown at a CAGR of 12.7%, while net profit has compounded at 111.8%. This has translated into strong return ratios. The average RoE stood at 19.4% and the average RoCE was 27.8%.

FY25 was a mixed year as revenue declined and Ebitda dropped by half. But in the March quarter, some showed signs of recovery. Quarterly volumes rose 10% sequentially, and Ebitda per tonne improved to ₹837, up from just ₹40 in the previous quarter.

The company is debt-free and has consistently rewarded shareholders. Its three-year average dividend payout is 80.7%, and its dividend yield is 3.2%. For FY25, it declared a dividend of ₹1.5 per share.

Growth visibility looks strong as the company is undertaking brownfield expansion to add 3 m tonnes of grinding capacity, doubling its base.

This project is estimated to cost ₹250 crore, to be funded through a 50-50 mix of debt and internal accruals. Commercial operations are expected to begin in Q4 FY26.

The company closed FY25 at a capacity of 24.3 million tonnes of grey cement and 1.7 million tonnes of white cement and putty. By FY26, total capacity is expected to hit 30 million tonnes, backed by projects in Panna, Hamirpur, Prayagraj, and Bihar.

In FY25, JK Cement’s revenue rose 1%, while Ebitda dipped 1%. Profit after tax grew 5%, but Ebitda per tonne declined 6.4%, reflecting cost pressures earlier in the year. Margins remained steady at 18.5%.

The company is holding steady on balance sheet strength. Net debt to equity stands at 0.42, and net debt to Ebitda at 1.13 times.

FY26 capex is between ₹1,800 crore and ₹2,000 crore and is entirely earmarked for expansion.

JK Cement is also actively diversifying. The white cement and wall putty business now contributes 1.72 million tonnes, while premium products account for 15% of grey trade sales.

As the cement sector builds for the future, investors must build their expectations carefully.

A surge in planned capacity, softening input costs and efficiency gains paint a promising picture. But in a business where returns come in cycles, momentum can fade as fast as it builds up.

Capital is being deployed aggressively, yet past cycles remind us that expansion alone does not ensure value creation.

Valuations in parts of the sector have already priced in the next phase of growth. That leaves little room for missteps.

Investors would do well to dig beyond earnings estimates and focus on balance sheet strength, return ratios, and the ability to convert capacity into cash flows.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com.

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