Grasim Remains ICICI Securities' Preferred Cement Play as Sector Faces Near-Term Pricing Pressure
Key Takeaways
- •ICICI Securities analyst Navin Sahadeo has identified Grasim Industries as the brokerage's top pick in the cement sector.
- •Grasim is expected to benefit from continued high dividend payments by UltraTech Cement, in which it holds a controlling stake.
- •Improving performance in Grasim's paints business and B2B e-commerce operations supports its diversification away from cyclical cement realisations.
- •Cement sector realisations for the July–September 2026 quarter are projected to decline 1–1.5% sequentially, with EBITDA per tonne potentially falling by ₹200–250.
Grasim Industries stands out as ICICI Securities' preferred play in the cement sector, according to Navin Sahadeo, an analyst at the brokerage.
Sahadeo said he expects UltraTech Cement, in which Grasim holds a controlling stake, to continue paying high dividends. He also pointed to improving traction in Grasim's paints business and its B2B e-commerce operations as supporting factors for the company's outlook. For a conglomerate historically anchored in cement and fibres, these newer businesses represent a broader diversification effort aimed at reducing reliance on cyclical cement realisations.
Grasim Industries is part of the Aditya Birla Group and operates across multiple businesses, including cement (through UltraTech Cement, India's largest cement producer), viscose staple fibre, chemicals, financial services, and paints. UltraTech Cement has a substantial installed production capacity across India and is among the largest cement makers globally by capacity. India's cement demand is closely tied to infrastructure spending and housing construction, making sector profitability sensitive to both government capex cycles and monsoon-linked seasonal slowdowns in activity.
At the sector level, however, the near-term outlook is under pressure. Realisations for the July–September 2026 quarter (Q2FY27) are expected to decline 1–1.5% sequentially, and EBITDA per tonne could fall by ₹200–250, according to the analyst's assessment. Sequential pricing weakness of this kind typically reflects competitive pressure among large producers and softer demand during the monsoon quarter, factors analysts watch when gauging whether margin pressure proves temporary or persists into subsequent quarters.
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Source: CNBC-TV18
