Nomura remains constructive on the cement sector, naming UltraTech Cement and Dalmia Bharat as top picks. The brokerage said pricing momentum improved in September, with trade prices rising by Rs10 per bag. Nomura noted, "sustained margins will depend more on the industry's ability to maintain pricing than on further easing."

Nomura remains constructive on the cement sector despite near-term margin headwinds, with UltraTech Cement and Dalmia Bharat as its top picks, both rated 'Buy'. The brokerage said channel checks indicate improving pricing momentum, although demand recovery remains key. Pan-India average cement trade prices increased by around Rs10/bag month-on-month in September, with dealers expecting a further around Rs10/bag hike in October. Nomura said pricing momentum improved after two subdued months, taking 2QFY27 average adjusted trade prices to Rs325/bag, broadly flat quarter-on-quarter. However, dealers said the recent price push was "largely company-led" and cautioned that absorption of further hikes would remain difficult and delayed, with poor uptake, upcoming festivities and monsoon-related disruptions weighing on construction activity. South India saw the strongest pricing momentum, with dealers indicating further hikes of up to Rs20/bag in October, although demand remains weak. West India saw better volume offtake in September, while announced Rs10/bag hikes in the East and North have yet to be effectively implemented. Central India remained largely flat. Cost pressures increased in the latter part of 2QFY27 following the escalation of the West Asia conflict. Average imported pet coke prices remained broadly flat quarter-on-quarter, while thermal coal prices rose 2% and retail diesel prices increased 4%. Average imported fuel costs rose 1% quarter-on-quarter and remained over 15% above 4QFY26 levels. Nomura said "sustained margins will depend more on the industry's ability to maintain pricing than on further easing in input costs", given limited pricing power due to weak demand. Cement spreads averaged around Rs2,449/t in 2QFY27, down Rs62/t quarter-on-quarter. The 60-day fuel cost-lagged spread was down around Rs106/t versus the 1QFY27 average, while the 90-day-lagged spread indicated a larger decline of Rs250/t. Nomura expects the pressure to be largely confined to 1HFY27, with cement pricing and demand improving after the monsoon. It maintains its FY27F volume growth estimate of 6-7% and expects pricing discipline to improve in 2HFY27F, supporting margin recovery.