Cement stocks are likely to remain in focus as improving demand, higher government capital expenditure and recent price hikes offer some relief to the sector. However, rising input costs, particularly a sharp increase in petcoke prices amid geopolitical tensions in West Asia, could weigh on profitability in the second half of FY27.
Domestic brokerage Nuvama Institutional Equities has maintained a neutral stance on the cement sector, citing persistent cost pressures despite signs of a recovery in demand and pricing. The brokerage has retained JK Cement as its top pick, with a 'Buy' rating.
According to Nuvama, cement demand improved month-on-month across most regions in October 2026, supported by the withdrawal of the monsoon and pre-festive season demand. However, demand remained relatively weak in parts of eastern India due to continued rainfall and festive-season disruptions.
Nuvama highlighted that government capital expenditure, which remained relatively subdued in FY25 and FY26, witnessed a significant improvement during the first half of FY27.
According to the brokerage, overall government capex, comprising spending by the Centre, states and central public sector enterprises (CPSEs), surged around 40% year-on-year during April–August 2026, compared with a 22% increase in the corresponding period last year. Spending accelerated further in August, registering a 93% year-on-year jump.